4. Garden Depot is a retailer that is preparing its budget for the upcoming fisc
ID: 2574222 • Letter: 4
Question
4. Garden Depot is a retailer that is preparing its budget for the upcoming fiscal year prepared the following summary of its budgeted cash flows: . Management has 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter 180,000 $ 330,000 $ 210,000 S 230,000 ,000 Total cash recei Total cash disbursements 260,000 230,000220,000 S 240 The company's beginning cash balance for the upcoming fiscal year will be a minimum cash balance of $10,000 and may borrow any amount needed from a interest rate of 3%. The company may borrow 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. $20,000. The company requires local bank at a quarterly any amount at the beginning of any quarter and may repay Required: Prepare the company's cash budget for the upcoming fiscal year Answer:Explanation / Answer
Solution:
Cash Budget
Cash Budget
1st Quarter
2nd Quarter
3rd Quarter
4th Quarter
Cash balance at beginning
$20,000
$10,000
$40,000
$30,000
Add: cash receipts
$180,000
$330,000
$210,000
$230,000
Total cash available
$200,000
$340,000
$250,000
$260,000
Less: Cash disbursements
$260,000
$230,000
$220,000
$240,000
Excess (deficiency) of cash available over disbursements
-$60,000
$110,000
$30,000
$20,000
Financing:
Borrowings
$70,000
Repayments
-$70,000
Interest on Borrowing
-$4,200
Total Financing
$70,000
-$70,000
Cash balance, ending
$10,000
$40,000
$30,000
20000
Note -- Interest Calculation 2nd Quarter Interest = $70,000*3%*2 = $4,200
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Cash Budget
1st Quarter
2nd Quarter
3rd Quarter
4th Quarter
Cash balance at beginning
$20,000
$10,000
$40,000
$30,000
Add: cash receipts
$180,000
$330,000
$210,000
$230,000
Total cash available
$200,000
$340,000
$250,000
$260,000
Less: Cash disbursements
$260,000
$230,000
$220,000
$240,000
Excess (deficiency) of cash available over disbursements
-$60,000
$110,000
$30,000
$20,000
Financing:
Borrowings
$70,000
Repayments
-$70,000
Interest on Borrowing
-$4,200
Total Financing
$70,000
-$70,000
Cash balance, ending
$10,000
$40,000
$30,000
20000
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