(c) Prepare a cash disbursements schedule for each month of the second quarter ending June 30. Do not include repayments of borrowings. NORDSTROMS Schedule of Monthly Cash Disbursements (in thousands) Quarter Ending June 30 Total cash disbursements April May June Total 0x $ 0x $ 0x $ 0x (d) Prepare a cash budget for each month of the second quarter ending June 30. Include budgeted borrowings and repayments
(c) Prepare a cash disbursements schedule for each month of the second quarter ending June 30. Do not include repayments of borrowings. NORDSTROMS Schedule of Monthly Cash Disbursements (in thousands) Quarter Ending June 30 Total cash disbursements April May June Total 0x $ 0x $ 0x $ 0x (d) Prepare a cash budget for each month of the second quarter ending June 30. Include budgeted borrowings and repayments
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question

Transcribed Image Text:Assume Nordstrom prepares budgets quarterly. The following information is available for use in planning the second quarter budgets for one of its stores (in thousands).
NORDSTROM
Balance Sheet
March 31
Liabilities and Stockholders' Equity
$2,525 Merchandise purchases payable $2,400
Dividends payable 710
Stockholders' equity 8,005
Assets
Cash
Accounts receivable
Inventory
2,040
3,400
Prepaid Insurance
150
Fixtures
3,000
Total assets
$11,115
Total liabilities and equity $11,115
Actual and forecasted sales for selected months in the upcoming year are as follows:
Month (in thousands) Sales Revenue
January
February
March
April
May
June
July
August
$2,600
2,700
3,000
3,600
3,800
3,500
3,200
4,000
Monthly operating expenses are as follows:
Wages and salaries $750
Depreciation
Advertising
Other costs
75
55
350
Cash dividends for the store of $710 thousand are declared during the third month of each quarter and are
paid during the first month of the following quarter. Operating expenses, except insurance, rent, and
depreciation are paid as incurred. The prepaid insurance is for five more months. Cost of goods sold is equal
to 60% of sales. Ending inventories are sufficient for 150% of the next month's cost of sales. Purchases during
any given month are paid in full during the following month. Cash sales account for 50% of the revenue. Of the
credit sales, 60% are collected in the next month and 40% are collected in the month after. Money can be
borrowed and repaid in multiples of $100 thousand at an interest rate of 12% per year. The company desires a
minimum cash balance of $2 million on the first of each month. At the time the principal is repaid, interest is
paid on the portion of principal that is repaid. All borrowing is at the beginning of the month, and all
repayment is at the end of the month. Money is never repaid at the end of the month it is borrowed.
(c) Prepare a cash disbursements schedule for each month of the second quarter ending June 30. Do not include repayments of borrowings.
NORDSTROMS
Schedule of Monthly Cash Disbursements (in thousands)
Quarter Ending June 30
Total cash disbursements
April
May
0x $
June
0x $ 0x $
Total
0x
(d) Prepare a cash budget for each month of the second quarter ending June 30. Include budgeted borrowings and repayments
Only use negative signs, if needed, for: excess receipts over disbursements, balance before borrowings and cash balances (beginning and ending).
NORDSTROMS
Monthly Cash Budget (in thousands)
Quarter Ending June 30
April
May
June
Total
Cash balance, beginning
$
0x $
0x $
0x
0x
Receipts
0x
0x
0x
0x
Disbursements
0x
0x
0x
0x
Excess receipts over disb.
0x
0x
0 x
0 x
Balance before borrowings
0x
0x
0x
0 x
Borrowings
0x
0 ✓
0✓
0x
Loan repayments
0 ✓
0x
0x
0x
Cash balance, ending
$
0x
$
0x $
0x $
0x
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