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 $ 250,000 $ 400,000 $ 280,000 $300,000 $ 309,000 $ 279,000 $ 269,000 $289,000 The company's beginning cash balance for the upcoming fiscal year will be $34,000. 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.) Garden Depot Cash Budget 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Year Beginning cash balance Total cash receipts Total cash available Total cash disbursements Excess of cash available over disbursements Financing Borrowings Repayments Interest Total financing Ending cash balance

Answer 1

Answer-

Garden Depot
Cash Budget
	Quarter
Particulars	1st	2nd	3rd	4th	Year
	$	$	$	$
Beginning cash balance	34000	10000	93900	104900	34000
Total cash receipts	250000	400000	280000	300000	1230000
Total cash available	284000	410000	373900	404900	1264000
Total cash disbursements	309000	279000	269000	289000	1146000
Excess of cash available over disbursements	-25000	131000	104900	115900	118000
Financing:-
Borrowings	35000	0	0	0	35000
Repayments	0	-35000	0	0	-35000
Interest	0	-2100	0	0	-2100
Total financing	35000	-37100	0	0	-37100
Ending cash balance	10000	93900	104900	115900	115900

Where - Interest = $35000*3%*2 quarter

= $2100