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

Question

arden 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 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter 320,000 $440,000 $370,000 390,000 $372,000 $342,000 $332,000 $352,000 The company's beginning cash balance for the upcoming fiscal year will be $27,000. 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 u fiscal year. (Cash deficiencies, disbursements repayments, and interest should be indicated by a minus sign.) Garden Depot Cash Budget 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Year Beginning cash balance Total cash receipts Total cash available Less total cash disbursements Excess of cash available over disbursements Financing Borrowings Interest Total financing Ending cash balance

Explanation / Answer

Prepare Cash Budget :

1st quarter 2nd quarter 3rd quarter 4th quarter year Beginning cash Balance 27000 10000 71950 109950 27000 Total Cash Receipts 320000 440000 370000 390000 1520000 Total cash available 347000 450000 441950 499950 1547000 Less: Total cash disbursements -372000 -342000 -332000 -352000 -1398000 Excess of cash available over disbursements -25000 108000 109950 147950 149000 Financing: Borrowings 35000 35000 Repayments -35000 -35000 Interest -1050 -1050 Total Financing 35000 -36050 -1050 Ending cash balance 10000 71950 109950 147950 147950

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