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 $ 400,000 $ 280,000 $ 250,000 $ 309,000 $ 279,000 $ 269,000 The company's beginning cash balance for the upcoming fiscal year will be $34,000. 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 Quarter $ $ 2nd Quarter 34,000 $ 250,000 284,000 309,000 (25,000) Prev 35,000 35,000 10,000 $ 4th Quarter $ 300,000 $ 289,000 7 of 8 3rd Quarter 10,000 $ 400,000 410,000 279,000 131,000 (35,000) (2,100) (37,100) 93,900 ‒‒‒ ‒‒‒ $ Next > 93,900 280,000 373,900 269,000 104,900 0 104,900 4th Quarter $ 104,900 300,000 404,900 289,000 115,900 $ 0 115,900 Year
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 $ 400,000 $ 280,000 $ 250,000 $ 309,000 $ 279,000 $ 269,000 The company's beginning cash balance for the upcoming fiscal year will be $34,000. 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 Quarter $ $ 2nd Quarter 34,000 $ 250,000 284,000 309,000 (25,000) Prev 35,000 35,000 10,000 $ 4th Quarter $ 300,000 $ 289,000 7 of 8 3rd Quarter 10,000 $ 400,000 410,000 279,000 131,000 (35,000) (2,100) (37,100) 93,900 ‒‒‒ ‒‒‒ $ Next > 93,900 280,000 373,900 269,000 104,900 0 104,900 4th Quarter $ 104,900 300,000 404,900 289,000 115,900 $ 0 115,900 Year
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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.
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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
$ 250,000
$ 309,000
Beginning cash balance
Total cash receipts
Total cash available
Total cash disbursements
Excess (deficiency) of cash available over disbursements
Financing:
Borrowings
Repayments
Interest
2nd Quarter
$ 400,000
$ 279,000
Total financing
Ending cash balance
The company's beginning cash balance for the upcoming fiscal year will be $34,000. 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.
Saved
Garden Depot
Cash Budget
3rd Quarter
$ 280,000
$ 269,000
$
1st Quarter
$
< Prev
‒‒‒‒‒‒‒‒‒
2nd Quarter
34,000 $
250,000
284,000
309,000
(25,000)
35,000
35,000
10,000
$
4th Quarter
$ 300,000
$ 289,000
7 of 8
3rd Quarter
10,000 $ 93,900
400,000
280,000
410,000
373,900
279,000
269,000
131,000
104,900
(35,000)
(2,100)
(37,100)
93,900
☐☐☐
$
Next >
▪▪▪▪▪
0
104,900
4th Quarter
$ 104,900
300,000
404,900
289,000
115,900
$
0
115,900
Year
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