Total cash receipts Total cash disbursements 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter $ 180,000 $ 260,000 $ 330,000 $ 210,000 $ 230,000 $ 230,000 $ 220,000 $ 240,000 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.
Total cash receipts Total cash disbursements 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter $ 180,000 $ 260,000 $ 330,000 $ 210,000 $ 230,000 $ 230,000 $ 220,000 $ 240,000 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.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Could you help me figure out what is wrong here?
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
$ 180,000
2nd Quarter 3rd Quarter
$ 330,000
4th Quarter
$ 260,000
$ 230,000
$ 210,000
$ 220,000
$ 230,000
$ 240,000
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.
Note: Repayments, interest, and cash deficiencies should be indicated by a minus sign.
Answer is not complete.
Garden Depot
Cash Budget
1st Quarter
2nd Quarter
Beginning cash balance
Total cash receipts
$
20,000 $
10,000
$
3rd Quarter
35,800
4th Quarter
Year
S 25,800 $
180,000
330,000
210,000
Total cash available
200,000
340,000
245,800
230,000
255,800
91,600 x
950,000
1,041,600x
Total cash disbursements
260,000
230,000
220,000
240,000
950,000✓
Excess (deficiency) of cash available over disbursements
(60,000)
110,000
25,800
15,800
91,600 x
Financing:
Borrowings
Repayments
Interest
Total financing
Ending cash balance
70,000
(70,000)
(4,200)
(4,200)
70,000
$
10,000 $
(74,200)
35,800
0
0
(74,200) x
25,800
$
15,800
70,000
(70,000)
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