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
Total cash receipts	$280,000	$400,000	$330,000	$350,000
Total cash disbursements	$344,000	$314,000	$304,000	$324,000
The company’s beginning cash balance for the upcoming fiscal year will be $45,000. 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. Garden Depot Cash Budget 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Year Beginning cash balance $45,000 $10,000 Total cash receipts Total cash available 45,000 10,000 Less total cash disbursements Excess of cash available over disbursements 45,000 10,000 Financing: Borrowings Repayments Interest Total financing 0 0 Ending cash balance $45,000 $10,000

Answer 1

G.D Cash Budget Particulars Beginning cash balance Add Total Cash receipts Total cash available Less: Total cash Disbursements Total S45,000$10,000 S65,260S91,260 S211,520 $280,000S400,000 S330,000S350,000 S1,360,000 $325,000「 $410.000 | S395.260 | $441.260「$1,571,520 S344,000 S314,000 S304,000 S324,000 $1,286,000 lst Quarter 2nd Quarter 3rd Quarter 4th Quarter Excess/(Deficiency) of cash available over disbursements(1)(S19,000)S96,000$91,260 $117,260S285,520 S29,000 ($1,740 Financing: Borrowings S29,000 (S29,000) (S1,740) 29,000(S30.740 (S29,0 Interest Total Financing (2) Ending cash balance(1)+(2 1740 91260S117,260 S283.780 10,000 S65.260 Interest is calculated as follows Interest-$29. 000x390x2 quarters -$1,740