aller that is preparing its budget for the upcoming liscal year. Management has prepared the following summ of its budgeted cash flows: Total cash receipts Total cash disbursements 1st Quarter $ 270,000 $ 323,000 2nd Quarter 3rd Quarter $ 420,000 $ 300,000 $ 293,000 $ 283,000 4th Quarter $ 320,000 $ 303,000 The company's beginning cash balance for the upcoming fiscal year will be $38,000. 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.
aller that is preparing its budget for the upcoming liscal year. Management has prepared the following summ of its budgeted cash flows: Total cash receipts Total cash disbursements 1st Quarter $ 270,000 $ 323,000 2nd Quarter 3rd Quarter $ 420,000 $ 300,000 $ 293,000 $ 283,000 4th Quarter $ 320,000 $ 303,000 The company's beginning cash balance for the upcoming fiscal year will be $38,000. 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.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Concept explainers
Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
Question
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Transcribed Image Text: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
$ 270,000 $ 420,000 $ 300,000
$ 293,000
$ 323,000
$ 283,000
The company's beginning cash balance for the upcoming fiscal year will be $38,000. 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.
Note: Repayments, interest, and cash deficiencies should be indicated by a minus sign.
Beginning cash balance
Total cash receipts
Total cash available
Total cash disbursements
Excess (deficiency) of cash available over disbursements
Financing:
Borrowings
Repayments
Interest
Total financing
Ending cash balance
Garden Depot
Cash Budget
1st
$
38,000
270,000
308,000
323,000
(15,000)
0
$ (15,000)
2nd
$
4th Quarter
$ 320,000
$ 303,000
$
3rd
10,000 $
420,000
430,000
293,000
137,000
0
137,000 $
4th
111,250 $
300,000
411,250
283,000
128,250
0
128,250
$
128,250
320,000
448,250
303,000
145,250
0
145,250
Year
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