Garden Depot is a retailer that is preparing its budget for the upcoming fiscal
ID: 2427989 • Letter: G
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: The company's beginning cash balance for the upcoming fiscal year will be $36,000. 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. Complete the company's cash budget for the upcoming fiscal year.Explanation / Answer
Garden depot Cash Budget 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr Year Beginning Cash Balance 36,000 10,000 103,100 117,100 36,000 Total Cash Receipts 260,000 410,000 290,000 310,000 1,270,000 Total Cash Available 296,000 420,000 393,100 427,100 1,306,000 Less: Total Cash disbursements (316,000) (286,000) (276,000) (296,000) (1,174,000) Excess of cash available over disbursements (20,000) 134,000 117,100 131,100 132,000 Financing: Borrowings 30,000 - - - 30,000 Repayments - (30,000) - - (30,000) Interest - (900) - - (900) Total Financing 30,000 (30,900) - - (900) Ending Cash Balance 10,000 103,100 117,100 131,100 131,100
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