Garden Depot is a retailer that is preparing its budget for the upcoming fiscal

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 Total cash receipts Total cash disburs 1st Quarter 2nd Quarter 3rd Quarter 4th Ouarter 360,000 480,000 410,000 430,000 400,000 370,000 360,000 380,000 ements The company's beginning cash balance for the upcoming fiscal year will be $18,000. 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 Prepare the company's cash budget for the upcoming fiscal year. (Repayments, and interest, should be indicated by a minus sign.) Garden Depot Cash Budget 1st Quarter 2nd Quarter 3rd Quarter 4th QuarterYear Beginning cash balance Total cash receipts Total cash available Total cash disbursements Excess of cash available over disbursem Financing Borrowings

Explanation / Answer

Prepare cash budget :

1st quarter 2nd quarter 3rd quarter 4th quarter Year Beginning cash balance 18000 10000 87040 137040 18000 Total cash receipts 360000 480000 410000 430000 1680000 Total cash available 378000 490000 497040 567040 1698000 Total cash disbursements (400000) (370000) (360000) (380000) (1510000) Excess of cash available over disbursements (22000) 120000 137040 187040 188000 Financing : Borrowing 32000 32000 Repayments (32000) (32000) Interest payment (960) (960) Ending cash balance 10000 87040 137040 187040 187040

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