Question

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.) Cash Budget Quarter (000 omitted) 2 3 - 1 4 Year Cash balance, beginning Add collections from customers Total cash available 97 335 Less disbursements: 36 46 7 10 11 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 16 (15) Cash balance, ending *Interest will total $1,000 for the year.

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Answer 1

Cash Budget	Quarter (000 Omitted)				Year
	1	2	3	4
Cash Balance, Beginning	$                                     7	$                         5	$                                        5	$                                             5	$                                               7
Add: Collections from customers	$80-$7 = $73	$77-$5 = $72	$                                     97	$335-$73-$72-$97 = $93	$                                          335
Total Cash Available	$                                   80	$88-$11 = $77	$97+$5 = $102	$93+$5 = $98	$7+$335 = $342
Less: Disbursment
Purchase of Inventory	$                                   36	$                       46	$88-$30-$11-$2 = $45	$                                          28
Operating expenses	$75-$36-$7-$2 = $30	$                       30	$                                     30	$117-$30-$30-$30 = $27	$                                          117
Equipment purchases	$                                     7	$                       10	$                                     11	$38-$11-$10-$7 = $10	$                                            38
Dividends	$                                     2	$                         2	$                                        2	$                                             2	$2+$2+$2+$2 = $8
Total Disbursments	$80+$2 = $82	$                       88	$102-$14 = $88	$28+$27+$10+$2 = $67	$82+$88+$88+$67 = $325
Excess (Deficiency) of cash available over disbursments	$                                   (2)	$5-$16 = ($11)	$                                     14	$98-$67 = $31	$342-$318 = $24
Financing
Borrowings	$5+$2 = $7	$                       16			$7+$16 = $23
Repayments (Including Interest)*			$5-$14 = ($9)	$                                        (15)	($9)+($15) = ($24)
Total Financing	$                                     7	$                       16	$                                     (9)	$                                        (15)	$                                            (1)
Cash Balance, Ending	$7-$2 = $5	$16-$11 = $5	$14-$9 = $5	$31-$15 = $16	$342-$325-$1 = $16
* Interest will total $1,000 for the year

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