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: 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter 250,000 400,000 280,000 300,000 Total cash receipts Total cash disbursements 309,000 279,000 269,000289,000 The company's beginning cash balance for the upcoming fiscal year will be $34,000. 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 disbursements Financing: Borrowings Repayments Interest

Explanation / Answer

Prepare cash budget :

300000

1st quarter 2nd quarter 3rd quarter 4th quarter Year Beginning cash 34000 10000 94950 105950 34000 Total Cash receipts 250000 400000 280000

300000

1230000 Total cash available 284000 410000 374950 405950 1264000 Total cash disbursement 309000 279000 269000 289000 1146000 Excess of cash over disbursement (25000) 131000 105950 116950 118000 Financing : Borrowings 35000 35000 Repayments (35000) (35000) Interest (1050) (1050) Ending cash balance 10000 94950 105950 116950 116950

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