The accountant for Rooney\'s Dress Shop prepared the following cash budget. Roon

Question

The accountant for Rooney's Dress Shop prepared the following cash budget. Rooney's desires to maintain a cash cushion of $17,000 at the end of each month. Funds are assumed to be borrowed and repaid on the last day of each month. Interest is charged at the rate of 3 percent per month Required a. Complete the cash budget by filling in the missing amounts. b. Determine the amount of net cash flows from operating activities Rooney's will report on the third quarter pro forma statement of cash flows c. Determine the amount of net cash flows from financing activities Rooney's will report on the third quarter pro forma statement of cash flows Answer is not complete Complete this question by entering your answers in the tabs below. Req A Req B and C Complete the cash budget by filling in the missing amounts. (Any shortages or repayments should be indicated with a minus sign. Round your answers to the nearest whole dollar amount.) July August September Cash Budget Section 1: Cash receipts Beginning cash balance Add cash receipts $49,000 $ 17,000$ 17,000 253,600 242,000 230,000 270,600 93,000 213,000 Total cash available Section 2: Cash payments For inventory purchases For S&A; expenses For interest expense 172,026 146,730 67,060 241 233,026214,031 180,652 67,932 31 248,615 61,000 Total budgeted disbursements Section 3: Financing activities Surplus (shortage) Borrowing (repayments) 8,974 15,969 1.031 $17,000 $17,000 $ 17,000 21,985 8,026 (4,985) Ending cash balance

Explanation / Answer

a.

Explanations:

Interest expense for September = 3% of (amount borrowed in July+amount borrowed in August) = 3% of (8026+1031) = 272

Total budgeted disbursements for September = disbursements for inventory purchases+for SG&A+for interest = 180652+67932+272 = $248,856

Surplus for September = total cash available - total budgeted disbursements = 270600-248856 = $21,744

Repayment in september = 21,744-17,000 = 4744

b. Net cash from operating activities for the quarter of July to September =

Sum of cash receipts from customers – sum of total budgeted disbursements

= (193,000+213,000+253,600) – (233,026+214,031+248,856)

= 659,600-695,912

= - 36,312 (a cash outflow)

b.

(36,312)

c. Net cash financing activities = amount borrowed-repayments

= (8026+1031)-4744

= 4312

Cash Budget July August September Section 1: Cash receipts Beginning balance 49,000 17,000 17,000 Add: cash receipts 193,000 213,000 253,600 Total cash available 242,000 230,000 270,600 Section 2: Cash payments For inventory purchases 172,026 146,730 180,652 For SG&A expenses 61,000 67,060 67,932 For interest expense 0 241 272 Total budgeted disbursements 233,026 214,031 248,856 Section 3: Financing activities Surplus (shortage) 8,974 15,969 21,744 Borrowing (repayments) 8,026 1,031 (4,744) Ending cash balance 17,000 17,000 17,000

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