Garden Depot is a retailer that is preparing its budget for the upcoming fiscal
ID: 2511984 • 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 $30,000. 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 upcoming fiscal year.
1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Total cash receipts $230,000 $380,000 $260,000 $280,000 Total cash disbursements $295,000 $265,000 $255,000 $275,000Explanation / Answer
CASH BUDGET Q-1 Q-2 Q-3 Q-4 YEAR Beginning cash balance 30,000 10000 77300 82,300 30000 Total Cash receipts 230,000 380000 260000 280,000 1150000 Total cash available 260,000 390,000 337,300 362,300 1,180,000 Less: Disbursement 295000 265000 255000 275,000 1,090,000 Excess/(deficiency) of cash -35,000 125,000 82,300 87,300 90,000 Financing: Borrowings 45000 0 0 Repayment -45,000 0 0 Interest -2700 -2,700 Total financing 45,000 0 0 0 0 Ending cash balance 10000 77300 82300 87300 87300
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