Exercise 8-11 Cash Budget Analysis [LO8-8] A cash budget, by quarters, is given

Question

Exercise 8-11 Cash Budget Analysis [LO8-8] A cash budget, by quarters, is given below for a retail company (000 omitted). The company requires a minimum cash balance of at least $3,000 to start each quarter. Fill in the missing amounts. (Enter your answers in thousands of dollars. Cash deficiencies and Repayments should be indicated by a minus sign.) Quarter (000 omitted) Year Cash balance, beginning Add collections from customers Total cash available Less disbursements: 108 124 431 127 Purchase of inventory 54 54 30 Selling and administrative expenses 45 30 137 Dividends Total disbursements Excess (deficiency) of cash available over disbursements Financing: 102 120 115 12 12 Repayments (including interest) Total financing Cash balance, ending Interest will total $1,000 for the year (12)

Explanation / Answer

Cash budget :

Quarter 1 2 3 4 Year Cash balance, beginning 9 3 3 3 9 Add: Collection from customers 88 108 124 111 431 Total cash available 97 111 127 114 440 Less: Disbursements Purchase of inventory 54 64 54 30 202 Selling and administrative expense 39 45 30 23 137 Equipment purchase 7 9 29 10 55 Dividends 2 2 2 2 8 Total Disbursements 102 120 115 65 402 Excess(deficiency) of cash available over disbursement (5) (9) 12 49 38 Financing Borrowing 8 12 0 0 20 Repayments (including interest) 0 0 (9) (12) (21) Total financing 8 12 (9) (12) (1) Cash balance ending 3 3 3 37 37

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