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: 1st Quarter 2nd Quarter 3rd Quarter $290, 000 $ $ 337, 000 307, 000 $297, 000 4th Quarter 320, 000 340, 000 317, 000 Total cash receipts Total cash disbur sements $ 440, 000 The company's beginning cash balance for the upcoming fiscal year will be $42,000. 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 Prepare the company's cash budget for the upcoming fiscal year. (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 Total cash disbursements Excess of cash available over disbursements Financing: Borrowings Repayments nterest Total financing Ending cash balance

Explanation / Answer

1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Year Beginning Cash Balance 42000 10000 127550 150550 42000 Total Cash Reciptes 290000 440000 320000 340000 1390000 Total Cash Available 332000 450000 447550 490550 1432000 Total Cash Disubursment 337000 307000 297000 317000 1258000 Excess of Cash Available over disbursemnts -5000 143000 150550 173550 174000 Financing Borrowing 15000 0 0 15000 Repayment -15000 0 0 -15000 Interest -450 0 0 -450 Total Financing 15000 -15450 0 0 -450 Ending Cash Balance 10000 127550 150550 173550 173550

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