Exercise 87 Cash Budget LO88 of its budgeted cash flows 309

Exercise 8-7 Cash Budget [LO8-8 of its budgeted cash flows: $ 309,000 $ 279,880 269,830 289,800 from a local bank at a quarterly interest rate of 3% The company may borrow any of $10,000 and may borrow any amount n 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 Prepare the company\'s cash budget for the upcoming fiscal year. (Repayments, and interest, should be indicated by a minus sign.) 1st 3rd 4th Year S 34,000S 10,000 11,000 11,000118,000

Solution

Cash Budget 1st Qtr 2nd Qtr 3rd Qtr 4th qtr Total Beginning cash balance $34,000 $10,000 $94,950 $105,950 $34,000 Cash receipts 250,000 400,000 280,000 300,000 1,230,000 Total cash available $284,000 $410,000 $374,950 $405,950 $1,264,000 Total cash disbursements 309000 279000 269000 289000 1,146,000 Excess of cash available over disbursements -25,000 131,000 105,950 116,950 $118,000 Financing Borrowings 35,000 0 0 0 35,000 Repayments 0 -35,000 0 0 -35,000 Interest 0 -1,050 0 0 -1,050 (35000*3%) 0 Total Financing 35,000 -36,050 0 0 -1,050 Ending cash balance $10,000 $94,950 $105,950 $116,950 $116,950 If any doubt please comment