Question

A cash budget, by quarters, is given below for retail company (000 omitted) The company requires a minimum cash balance of at least 6,000 to start each quarter. fill in the missing amounts. ( enter your answers in thousands of dollars. Cash deficiencies in repayments should be indicated by a minus sign.)

Quarter (000 omitted) (000 omitted) Year S 8 325 ol LE37 47 30 10 2 103 9 12 2 2 Cash balance, beginning Add collections from customers Total cash available Less disbursements: Purchase of inventory Selling and administrative expenses Equipment purchases Dividends Total disbursements Excess (deficiency of cash available over disbursements Financing Borrowings Repayments (including interest) * Total financing Cash balance, ending *Interest will total $1,000 for the year (3) 14

Answer 1

Answer-

	1	2	3	4	Year
Cash Balance, beginning	8	6	6	6	8
Add: Collections from customers	59	74	98	94	325
Total cash available	67	80	104	100	333
Less: Disbursements
Purchase of inventory	37	47	46	29	159
Selling and administrative expenses	22	30	30	21	103
Equipment Purchases	9	10	12	10	41
Dividends	2	2	2	2	8
Total Disbursements	70	89	90	62	311
Excess (Deficiency) of cash available over disbursements	-3	-9	14	38
Financing:
Borrowings	9	15	0	0
Repayments (including interest)	0	0	-8	-17
Total Financing	9	15	-8	-17
Cash Balance, ending	6	6	6	21	21

Quarter 1: 1. Deficiency of cash available over disbursements = $3,000 Therefore, total disbursements = $67,000 + $3,000 = $70,000 Selling and administrative expenses = Total disbursements - $37,000 - $9,000 - $2,000 = $30,000 2. Cash ending balance should be atleast $6,000 Plus, there is a deficit of $3,000 Therefore, total borrowings = $3,000 + $6,000 = $9,000

Quarter 2: 1. Total borrowings for quarter 2 is $15,000 of which a minimum balance of $6000 is to be maintained. This means that the deficit in this quarter = $15,000 - $6,000 = $9,000 2. If deficit is $9,000 then cash available = Total disbursements - $9,000 = $89,000 - $9,000 = $80,000 3. Collection from customers = Cash available - Beginning balance = $80,000 - $6,000 = $74,000

Quarter 3: 1. Excess cash available = $14,000 of which minimum balance of $6,000 will be maintained and the rest $8,000 will be repaid 2. Excess cash is $14,000 which means total disbursements will be total cash available - $14,000 = $104,000 - 14,000 = $90,000 3.Purchase of inventory = Total disbursements minus the rest of the expenses

Quarter 4: Collection from customers, Selling and administrative expenses and Equipment Purchases will be annual total minus the quarterly amounts