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Garden Depot is a retailer that is preparing its budget for theupcoming fiscal year....

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Accounting

Garden Depot is a retailer that is preparing its budget for theupcoming fiscal year. Management has prepared the following summaryof its budgeted cash flows:

1st Quarter2nd Quarter3rd Quarter4th Quarter
Total cash receipts$340,000$460,000$390,000$410,000
Total cash disbursements$386,000$356,000$346,000$366,000


The company’s beginning cash balance for the upcoming fiscal yearwill be $24,000. The company requires a minimum cash balance of$10,000 and may borrow any amount needed from a local bank at aquarterly interest rate of 3%. The company may borrow any amount atthe beginning of any quarter and may repay its loans, or any partof its loans, at the end of any quarter. Interest payments are dueon any principal at the time it is repaid. For simplicity, assumethat interest is not compounded.

Required:

Prepare the company’s cash budget for the upcoming fiscal year.(Repayments, and interest, should be indicated by a minussign.)

Answer & Explanation Solved by verified expert
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Q1

Q2

Q3

Q4

Year

Beginning Balance

$                                   24,000.00

$                  10,000.00

$                                     80,080.00

$       124,080.00

$           24,000.00

Cash receipts

$                                 340,000.00

$                460,000.00

$                                   390,000.00

$       410,000.00

$     1,600,000.00

Total Cash Available

$                                 364,000.00

$                470,000.00

$                                   470,080.00

$       534,080.00

$     1,624,000.00

Cash Disbursement

$                                 386,000.00

$                356,000.00

$                                   346,000.00

$       366,000.00

$     1,454,000.00

Excess (Deficiency) of Cash available

$                                 (22,000.00)

$                114,000.00

$                                   124,080.00

$       168,080.00

$        170,000.00

Ending balance required

$                                   10,000.00

$                  10,000.00

$                                     10,000.00

$         10,000.00

$           10,000.00

Financing:

Borrowed

$                                   32,000.00 [$ 22000 + $ 10,000]

$                                                     -  

$                        -  

$           32,000.00

Repaid

$                                                  -  

$                (32,000.00)

$                                                     -  

$                        -  

$        (32,000.00)

Interest

$                                                  -  

$                  (1,920.00)[ = 32000 x 3% x 2 quarters]

$                                                     -  

$                        -  

$           (1,920.00)

Total Financing

$                                   32,000.00

$                (33,920.00)

$                                                     -  

$                        -  

$           (1,920.00)

Ending Cash Balance

$                                   10,000.00

$                  80,080.00

$                                   124,080.00

$       168,080.00

$        168,080.00

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Transcribed Image Text

In: AccountingGarden Depot is a retailer that is preparing its budget for theupcoming fiscal year. Management...Garden Depot is a retailer that is preparing its budget for theupcoming fiscal year. Management has prepared the following summaryof its budgeted cash flows:1st Quarter2nd Quarter3rd Quarter4th QuarterTotal cash receipts$340,000$460,000$390,000$410,000Total cash disbursements$386,000$356,000$346,000$366,000The company’s beginning cash balance for the upcoming fiscal yearwill be $24,000. The company requires a minimum cash balance of$10,000 and may borrow any amount needed from a local bank at aquarterly interest rate of 3%. The company may borrow any amount atthe beginning of any quarter and may repay its loans, or any partof its loans, at the end of any quarter. Interest payments are dueon any principal at the time it is repaid. For simplicity, assumethat interest is not compounded.Required:Prepare the company’s cash budget for the upcoming fiscal year.(Repayments, and interest, should be indicated by a minussign.)

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