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 $350,000 $ 393,000 The company's beginning cash balance for the upcoming fiscal year will be $20,000. 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. (Repayments, and interest, should be indicated by a minus sign.) Beginning cash balance Total cash receipts Total cash available Total cash disbursements Excess of cash available over disbursements Financing: Borrowings Repayments Interest 2nd Quarter 3rd Quarter 4th Quarter $ 470,000 $ 400,000 $ 420,000 $363,000 $ 353,000 $ 373,000 Total financing Ending cash balance Garden Depot Cash Budget 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter $ 0 0 0 0 $ 0 0 0 0 0 0 0 0 0 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 $350,000 $ 393,000 The company's beginning cash balance for the upcoming fiscal year will be $20,000. 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. (Repayments, and interest, should be indicated by a minus sign.) Beginning cash balance Total cash receipts Total cash available Total cash disbursements Excess of cash available over disbursements Financing: Borrowings Repayments Interest 2nd Quarter 3rd Quarter 4th Quarter $ 470,000 $ 400,000 $ 420,000 $363,000 $ 353,000 $ 373,000 Total financing Ending cash balance Garden Depot Cash Budget 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter $ 0 0 0 0 $ 0 0 0 0 0 0 0 0 0 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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Transcribed Image Text:**Garden Depot Cash Budget Preparation**
Garden Depot is a retailer preparing its budget for the upcoming fiscal year. Management has compiled the following summary of its budgeted cash flows:
- **Total Cash Receipts:**
- 1st Quarter: $350,000
- 2nd Quarter: $470,000
- 3rd Quarter: $400,000
- 4th Quarter: $420,000
- **Total Cash Disbursements:**
- 1st Quarter: $393,000
- 2nd Quarter: $363,000
- 3rd Quarter: $353,000
- 4th Quarter: $373,000
The company's beginning cash balance for the upcoming fiscal year is $20,000. 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. *Repayments and interest should be indicated by a minus sign.*
**Cash Budget Table Explanation:**
The table is titled "Garden Depot Cash Budget" and consists of the following columns: 1st Quarter, 2nd Quarter, 3rd Quarter, 4th Quarter, and Year. Each row represents a specific budget item:
1. **Beginning Cash Balance**
2. **Total Cash Receipts**
3. **Total Cash Available**
4. **Total Cash Disbursements**
5. **Excess of Cash Available over Disbursements**
6. **Financing:**
- Borrowings
- Repayments
- Interest
7. **Total Financing**
8. **Ending Cash Balance**
The rows under "Total Cash Disbursements" and "Total Financing" are initially filled with zeros, indicating that detailed planning or input is required for each quarter and for the total year.
This structured format provides a clear overview of the projected financial operations and cash flow management for Garden Depot throughout the fiscal year.
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