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: Total cash receipts Total cash disbursements 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter $ 290,000 $ 440,000 $ 320,000 $ 340,000 $ 337,000 $ 307,000 $ 297,000 $ 317,000 The company's beginning cash balance for the upcoming fiscal year will be $42,000. 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.)

Answer 1

Cash Budget Particulars Quarter 1 Quarter 2 Quarter 3 Quarter - 4 Year 127100 320000 447100 297000 150100 Opening Cash Cash Collection Cash available 42000 10000 440000 150100 42000 340000 1390000 290000 332000 337000 450000 490100 1432000 317000 1258000 173100 Cash disbursements Net cash Financing Loan taken Laon repayment Interest paid Total Financing Closing cash 307000 143000 -5000 174000 15000 15000 0 -15000 -900 -15000 0 -15000 0 0 -900 15000 0 0 0 10000 150100 173100 127100 173100 15000 *3 %*2 = 900 >> Interest