Question

The accountant for Gibson’s Dress Shop prepared the following cash budget. Gibson’s desires to maintain a...

The accountant for Gibson’s Dress Shop prepared the following cash budget. Gibson’s desires to maintain a cash cushion of $22,000 at the end of each month. Funds are assumed to be borrowed and repaid on the last day of each month. Interest is charged at the rate of 1 percent per month.

Required

  1. Complete the cash budget by filling in the missing amounts.

  2. Determine the amount of net cash flows from operating activities Gibson’s will report on the third quarter pro forma statement of cash flows.

  3. Determine the amount of net cash flows from financing activities Gibson’s will report on the third quarter pro forma statement of cash flows.

    Cash Budget July August September
    Section 1: Cash receipts
    Beginning cash balance $46,500 $22,000 $22,000
    Add cash receipts 188,000 208,000 248,600
    Total cash available 234,500 230,000 270,600
    Section 2: Cash payments
    For inventory purchases 169,526 144,230 178,152
    For S&A expenses 58,500 64,560 65,432
    For interest expense 0
    Total budgeted disbursements 228,026
    Section 3: Financing activities
    Surplus (shortage) 6,474
    Borrowing (repayments) 15,526
    Ending cash balance $22,000 $22,000 $22,000

Determine the amount of net cash flows from both operating and financing activities Gibson's will report on the third quarter pro forma statement of cash flows. (Round intermediate calculations and final answers to the nearest whole dollar amount.)

Net cash (operating activities)
Net cash (financing activities)
0 0
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Answer #1

Solution Required a. July August September $46,500 $188,000 $234,500 $22,000 $208,000 $230,000 $22,000 $248,600 $270,600 Cash

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