The accountant for Jean’s Dress Shop prepared the following cash budget. Jean’s
ID: 2573454 • Letter: T
Question
The accountant for Jean’s Dress Shop prepared the following cash budget. Jean’s desires to maintain a cash cushion of $10,000 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 1 percent per month.
Required
Complete the cash budget by filling in the missing amounts.
Determine the amount of net cash flows from operating activities Jean’s will report on the third quarter pro forma statement of cash flows.
Determine the amount of net cash flows from financing activities Jean’s will report on the third quarter pro forma statement of cash flows.
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 Cash Budget Section 1: Cash receipts August September Beginning cash balance Add cash receipts 25,000 90,000100,000 115,000 120,300 Total cash available Section 2: Cash payments 87,076 30,716 82,750 70,115 For inventory purchases For S&A; expenses For interest expense 27,25030,280 110,000 Total budgeted disbursements Section 3: Financing activities Surplus (shortage) Borrowing (repayments) 5,000 5,000 Ending cash balance $10,000 10,00010,000Explanation / Answer
Cash Budget July August September Section 1: Cash Receipts Beginning Cash Balance $25,000 $10,000 $10,000 Add cash receipts $90,000 $100,000 $120,300 Total cash available $115,000 $110,000 $130,300 Section 2: Cash payments For inventory purchases $82,750 $70,115 $87,076 For S&A expenses $27,250 $30,280 $30,716 For interest expense $0 $50 $54 Total budgeted disbursements $110,000 $100,445 $117,846 Section 3: Financing activities Surplus (Shortage) $5,000 $9,555 $12,454 Borrowings (repayments) $5,000 $445 ($2,454) Ending Cash balance $10,000 $10,000 $10,000
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