Garden Depot is a retailer that is preparing its budget for the upcoming fiscal

Question

Garden Depot is a retailer that is preparing its budget for the upcoming fiscal year. Management has prepared the following summary of its budgeted cash flows: Total cash receipts Total cash disbursements $350,000 $318,000 $370,000 $338,000 $420,000 $300,000 $358,000$328,000 The company's beginning cash balance for the upcoming fiscal year will be $35,000. The company requires a minimum cash balance of $10,000 and may borrow any amount needed from a local bank at a quarterly interest rate of 3%. The company may borrow any amount at the beginning of any quarter and may repay its loans, or any part of its loans, at the end of any quarter. Interest payments are due on any principal at the time it is repaid. For simplicity, assume that interest is not compounded. Required Complete the company's cash budget for the upcoming fiscal year. (Cash deficiencies, disbursements, repayments, and interest should be indicated by a minus sign.) 3 Answer is not complete. Garden Depot Cash Budget 1st 3rd QuarterQuarter 2nd 4th Year 35,000s 10.000 35,000 Beginning cash balance Total cash receipts Total cash available Less total cash disbursements Excess of cash available over disbursements Financing 00,000 420000350,000370,0001,440.000 350.000 (358,000) (328,000) (318,000) (338,000)(1.342.000) 335,000 430,000 350 00e 370,000 1,475,000 (23,000) 102,000 32,000 133,000 Borrowings Repayments Interest o@ Total financing Ending cash balance is (23000) is 102.000 |s 32.000 IS 32.000 |s 133.000

Explanation / Answer

SOLUTION

Garden Depot

Cash Budget

* Interest - $33,000 * 12% * 2/4 = $1,980

1st Quarter ($) 2nd Quarter ($) 3rd Quarter ($) 4th Quarter ($) Beginning cash balance 35,000 10,000 67,020 99,020 Add: Cash receipts 300,000 420,000 350,000 370,000 Total cash available 335,000 430,000 417,020 469,020 Less: Cash Disbursements (358,000) (328,000) (318,000) (338,000) Excess of cash avaiable over disbursements (23,000) 102,000 99,020 131,020 Financing: Borrowings   33,000 0 0 0 Repayments   0 (33,000) 0 0 Interest* 0 (1,980) 0 0 Total financing 33,000 (34,980) 0 0 Ending cash balance 10,000 67,020 99,020 131,020

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