The accountant for Franklins Dress Shop prepared the followi

The accountant for Franklin’s Dress Shop prepared the following cash budget. Franklin’s desires to maintain a cash cushion of $21,000 at the end of each month. Funds are assumed to be borrowed and repaid on the last day of each month. Interest is charged at the rate of 3 percent per month.

Required

Complete the cash budget by filling in the missing amounts.

Determine the amount of net cash flows from operating activities Franklin’s will report on the third quarter pro forma statement of cash flows.

Determine the amount of net cash flows from financing activities Franklin’s will report on the third quarter pro forma statement of cash flows.

Req A Req B and C Complete the cash budget by filling in the missing amounts. (Any shortages or repayments should be indicated with a minus sign. Round your answers to the nearest whole dollar amount.) July AugustSeptember Cash Budget Section 1: Cash receipts Beginning cash balance Add cash receipts $ 46,000 187,000 233,000 207,000 247,600 Total cash available Section 2: Cash payments For inventory purchases For S&A; expenses For interest expense 143,730 64,060 177,652 64,932 169,026 58,000 227,026 Total budgeted disbursements Section 3: Financing activities 5,974 Surplus (shortage) Borrowing (repayments) 15,026 Ending cash balance $ 21,000$ 21,000 $ 21,000

Solution

Solution A:

Solution B:

Amount of net cash flows from operating activities Franklin’s will report on the third quarter pro forma statement of cash flows = Budgeted cash receipts - Budgeted cash disbursement

= $641,600 - $678,339 = ($36,739)

Solution C:

Amount of net cash flows from financing activities Franklin’s will report on the third quarter pro forma statement of cash flows = $11,739

Cash Budget
Particulars	July	August	September	Total
Cash Receipts:
Beginning Cash Balance	$46,000.00	$21,000.00	$21,000.00	$46,000.00
Add: Cash receipts	$187,000.00	$207,000.00	$247,600.00	$641,600.00
Total Cash available	$233,000.00	$228,000.00	$268,600.00	$687,600.00
Cash Payments:
For Inventory Purchases	$169,026.00	$143,730.00	$177,652.00	$490,408.00
For S&A Expense	$58,000.00	$64,060.00	$64,932.00	$186,992.00
For Interest Expense	$0.00	$451.00	$488.00	$939.00
Total Budgeted Disbursements	$227,026.00	$208,241.00	$243,072.00	$678,339.00
Financing Activities:
Surplus (Shortages)	$5,974.00	$19,759.00	$25,528.00	$9,261.00
Borrowing (Repayments)	$15,026.00	$1,241.00	-$4,528.00	$11,739.00
Ending Cash balance	$21,000.00	$21,000.00	$21,000.00	$21,000.00