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: 3rd Quarter $ 210,000 220,000 1st Quarter Quarter $ 180,000 $330,000 260,000 230,000 4th Quarter $ 230,000 240,000 Total cash receipts Total cash disbursements The company's beginning cash balance for the upcoming fiscal year will be $20,000. The company requires a minimum cash balance of $10,000 and may borrow any amount needed from a local bank at an annual interest rate of 12%. 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. Required: Prepare the company's cash budget for the upcoming fiscal year. (Any "Repayments" and "Interest" should be indicated by a minus sign.)

Answer 1

Statement showing Cash budget Particulars Quarter-1 Quarter-2 Quarter-3 Quarter-4 Year Beginning cash 20000 100001 393001 29300 20000 Cash Receipts 180000 330000 210000 230000 950000 Total cash 200000 340000 249300 259300 970000 Cash Payments 260000 230000 220000 240000 950000 Net amount -60000 110000 29300 19300 20000 Financing : Loan Taken 70000 70000 Laon Paid 70000 70000 Interest 700 700 Total Finance 70000 Closing Balance 10000 39300 29300 19300 19300 Interest = 70000* 1% = 700 >> Please provide feedback with UP VOTE