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 $ 220,000 $ 370,000 $ 250,000 $ 288,000 $ 258,000 $ 248,000 4th Quarter $ 270,000 $ 268,000 The company's beginning cash balance for the upcoming fiscal year will be $28,000. 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

Cash budget
	Quarter 1	Quarter 2	Quarter 3	Quarter 4	Total
Beginning cash balance	$         28,000	$       10,000	$        69,000	$       71,000	$       28,000
Add: Cash receipt	$       220,000	$     370,000	$      250,000	$     270,000	$ 1,110,000
Total Cash Available	$       248,000	$     380,000	$      319,000	$     341,000	$ 1,138,000
Less: cash Disbursement	$       288,000	$     258,000	$      248,000	$     268,000	$ 1,062,000
Excess of cash available over disbursement	$       (40,000)	$     122,000	$        71,000	$       73,000	$       76,000
Financing:
Borrowings	$         50,000				$       50,000
Repayments		$     (50,000)			$     (50,000)
Interest		$       (3,000)			$       (3,000)
Total financing	$         50,000	$     (53,000)	$                 -	$                 -	$       (3,000)
Ending cash balance	$         10,000	$       69,000	$        71,000	$       73,000	$       73,000

Borrowing in first quarter (10000+40000)	$         50,000
Interest paid at the end of second months (50000*3%*2 quarter)	$            3,000