125999 Garden Depot is a retailer that is preparing its budget for the upcoming
ID: 2391929 • Letter: 1
Question
125999 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 4th Quarter s 290, 000 440, 000 $320, 000 $340, 000 Total cash receipts Total cash disbursements $337,000 $307,000 $ 297,000 317,000 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. Prepare the company's cash budget for the upcoming fiscal year. (Repayments, and interest, should be indicated by a minus sign.) Cash Budget 1st 2nd 3rd 4th cash available Total cash diExplanation / Answer
Garden Depot
Cash Budget
1st Quarter
2nd Quarter
3rd Quarter
4th Quarter
Year
Beginning cash balance
42,000
10,000
127,100
150,100
42,000
Total cash receipts
290,000
440,000
320,000
340,000
1,390,000
Total cash available
332,000
450,000
447,100
490,100
1,432,000
Less: Total cash disbursements
337,000
307,000
297,000
317,000
1,258,000
Excess of cash available over disbursements
-5,000
143,000
150,100
173,100
174,000
Financing
Borrowings*
15,000
-
0
0
15,000
Repayments
-
-15,000
0
0
-15,000
Interests**
-
-900
0
0
-900
Total Financing
15,000
-15,900
0
0
-900
Ending cash balance
10,000
127,100
150,100
173,100
173,100
*Amount to be borrowed to maintain closing cash balance of $10,000 = $15,000
**Interest= $15,000 x 3% x 2 Quarter = $900
Garden Depot
Cash Budget
1st Quarter
2nd Quarter
3rd Quarter
4th Quarter
Year
Beginning cash balance
42,000
10,000
127,100
150,100
42,000
Total cash receipts
290,000
440,000
320,000
340,000
1,390,000
Total cash available
332,000
450,000
447,100
490,100
1,432,000
Less: Total cash disbursements
337,000
307,000
297,000
317,000
1,258,000
Excess of cash available over disbursements
-5,000
143,000
150,100
173,100
174,000
Financing
Borrowings*
15,000
-
0
0
15,000
Repayments
-
-15,000
0
0
-15,000
Interests**
-
-900
0
0
-900
Total Financing
15,000
-15,900
0
0
-900
Ending cash balance
10,000
127,100
150,100
173,100
173,100
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