Question

The accountant for Baird’s Dress Shop prepared the following cash budget. Baird’s desires to maintain a cash cushion of $24,000 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 Baird’s will report on the third quarter pro forma statement of cash flows.

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

Complete the cash budget by filling in the missing amounts. (Any shortages or repayments should be indicated with a minus sign. Round your answers to the nearest whole dollar amount.)

Cash Budget July August September Section 1: Cash receipts Beginning cash balance $52,500 Add cash receipts 200,000 220,000 260,600 Total cash available 252,500 Section 2: Cash payments For inventory purchases 175,526 150,230 184,152 For S&A expenses 64,500 70,560 71,432 For interest expense 0 Total budgeted disbursements 240,026 Section 3: Financing activities Surplus (shortage) 12,474 Borrowing (repayments) 11,526 Ending cash balance $24,000 $24,000 $24,000

Determine the amount of net cash flows from both operating and financing activities Baird'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.)

	b. Net cash (operating activities) c. Net cash (financing activities)

Answer 1

Surplus (shortage) = Total cash available - Total budgeted disbursements
Cash Budget	July	August	September
Section 1: Cash receipts
Beginning cash balance	$               52,500	$               24,000	$               24,000
Add cash receipts	$             200,000	$             220,000	$             260,600
Total cash available	$             252,500	$             244,000	$             284,600
Section 2: Cash payments
For inventory purchases	$             175,526	$             150,230	$             184,152
For S&A expenses	$               64,500	$               70,560	$               71,432
For interest expense	$                        -	$                     115	$                     124
Total budgeted disbursements	$             240,026	$             220,905	$             255,708
Section 3: Financing activities
Surplus (shortage)	$               12,474	$               23,095	$               28,892
Add(Less): Borrowing (repayments)	$               11,526	$                     905	$               (4,892)
Ending cash balance	$               24,000	$               24,000	$               24,000

August
Interest expense (11526*1%)	$                     115
Ending cash balance for August	$               24,000
Less: Surplus at end of August	$               23,095
Borrowing for August	$                     905
September
Total Borrowing (11526+905)	$               12,431
Interest expense (12431*1%)	$                     124
Ending cash balance for August	$               24,000
Less: Surplus at end of August	$               28,892
Borrowing (repayments) for August	$               (4,892)
Repayments for August	$                 4,892

	July	August	September	Total quarter
Cash receipts	$             200,000	$             220,000	$             260,600	$          680,600
Less: Total budgeted disbursements	$             240,026	$             220,905	$             255,708	$          716,639
Net cash (operating activities)	$             (40,026)	$                   (905)	$                 4,892	$          (36,039)
Borrowing of loan	$               11,526	$                     905		$            12,431
(repayments) of loan			$               (4,892)	$            (4,892)
Net cash (financing activities)	$               11,526	$                     905	$               (4,892)	$               7,539