You recently began a job as an accounting intern at Backyard Adventures. Your first task was to help prepare the cash budget for February and March. Unfortunately, the computer with the budget file crashed, and you did not have a backup or even a hard copy. You ran a program to salvage bits of data from the budget file. After entering the following data in the budget, you may have just enough information to reconstruct the budget. Backyard Adventures eliminates any cash deficiency by borrowing the exact amount needed from State Street Bank, where the current interest rate is 6%. Backyard Adventures pays interest on its outstanding debt at the end of each month. The company also repays all borrowed amounts at the end of the month as cash becomes available. Requirements: Complete the following cash budget. (For amounts with a $0 balance, make sure to enter "0" in the appropriate input field. Enter cash deficiencies with a minus sign or parentheses. Enter the net total effects of financing with a minus sign when the amount is a net outflow. Round interest expense to the nearest whole dollar.) Backyard Adventures Combined Cash Budget February and March February Beginning cash balance $16,600 Plus: Cash collections ? Plus: Cash from sale of plant assets 0 Total cash available $107,000 Less: Cash payments (purchase inventory) ? Less: Cash payments (operating expenses) 47,400 Total cash payments $97,900 (1) Ending cash balance before financing ? Minimum cash balance desired 24,000 Cash excess (deficiency) ? Financing: ? Plus: New borrowings ? Less: Debt repayments ? Less: Interest payments ? (2) Total effects of financing ? Ending cash balance (1) + (2) ?

Financial Management: Theory & Practice

16th Edition

ISBN:9781337909730

Author:Brigham

Publisher:Brigham

Chapter16: Supply Chains And Working Capital Management

Section: Chapter Questions

Problem 16MC: In an attempt to better understand RR’s cash position, Johnson developed a cash budget for the first...

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Question

You recently began a job as an accounting intern at Backyard Adventures. Your first task was to help prepare the cash budget for February and March. Unfortunately, the computer with the budget file crashed, and you did not have a backup or even a hard copy. You ran a program to salvage bits of data from the budget file. After entering the following data in the budget, you may have just enough information to reconstruct the budget.

Backyard Adventures eliminates any cash deficiency by borrowing the exact amount needed from State Street Bank, where the current interest rate is 6%. Backyard Adventures pays interest on its outstanding debt at the end of each month. The company also repays all borrowed amounts at the end of the month as cash becomes available.

Requirements:

Complete the following

cash budget.

(For amounts with a $0 balance, make sure to enter "0" in the appropriate input field. Enter cash deficiencies with a minus sign or parentheses. Enter the net total effects of financing with a minus sign when the amount is a net outflow. Round interest expense to the nearest whole dollar.)

Backyard Adventures

Combined Cash Budget

February and March

	February
Beginning cash balance	$16,600
Plus: Cash collections	?
Plus: Cash from sale of plant assets	0
Total cash available	$107,000
Less: Cash payments (purchase inventory)	?
Less: Cash payments (operating expenses)	47,400
Total cash payments	$97,900
(1) Ending cash balance before financing	?
Minimum cash balance desired	24,000
Cash excess (deficiency)	?
Financing:	?
Plus: New borrowings	?
Less: Debt repayments	?
Less: Interest payments	?
(2) Total effects of financing	?
Ending cash balance (1) + (2)	?

Definition Definition Estimate of an organization's cash flow for a future period. A cash budget forecasts future cash receipts and payments from various sources for a fiscal year. A cash budget can be created once a month or once a week to determine the organization's cash position and ensure its performance in relation to the budget. It aids in determining whether the company has enough cash and cash equivalents to meet its operational needs in the future.

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