Exercise 8-11 Cash Budget Analysis [LO8-8] A cash budget, by quarters, is given

Question

Exercise 8-11 Cash Budget Analysis [LO8-8] A cash budget, by quarters, is given below for a retail company (000 omitted). The company requires a minimum cash balance of at least $5,000 to start each quarter. Fill in the missing amounts. (Enter your answers in thousands of dollars. Cash deficiencies and Repayments should be indicated by a minus sign.) Quarter (000 omitted) Year Cash balance, beginning Add collections from customers Total cash available Less disbursements 96 323 35 Purchase of inventory Selling and administrative expenses Equipment purchases 45 35 30 30 113 36 85 Excess (deficiency) of cash available over disbursements 15 Repayments (including interest) Total financing Cash balance, ending Interest will total $1,000 for the year (17)

Explanation / Answer

1 2 3 4 Year Cash Balance 6 5 5 5 6 Add: Collections from Customers 65 70 96 92 323 Total Cash Available 71 75 101 97 329 Less: Disbursements Purchase of inventory 35 45 48 35 163 Selling and Admin. Exp 28 30 30 25 113 Equipment Purchases 8 8 10 10 36 Dividends 2 2 2 2 8 Total Disbursements 73 85 90 72 320 Excess(deficency) of cash available over disbursements -2 -10 11 25 9 Financing 0 Borrowing 7 15 22 Interest 1 1 Repayment (incl Int) -6 -17 -23 Total Financing 7 22 16 0 0 Cash Balance Ending 5 5 5 9 9

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