Question

The accountant for Vernon’s Dress Shop prepared the following cash budget. Vernon’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 1 percent per month.

Required

1. Complete the cash budget by filling in the missing amounts.

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

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

Find surplus and borrowing for Sept

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.) Cash Budget July September August Section 1: Cash receipts $51,000 21,000 21,000 Beginning cash balance Add cash receipts 257,600 197,000 217,000 238,000 278,600 248,000 Total cash available Section 2: Cash payments For inventory purchases 182,652 174,026 148,730 For S&A expenses 69,060 63,000 69,932 For interest expense 0 100 109 217,890 252,693 237,026 Total budgeted disbursements Section 3: Financing activities Surplus (shortage) 10,974 20,191 Borrowing (repayments) 10,026 890 21,000 21,000 21,000 Ending cash balance

Answer 1

July August Septmber Quarter $ 51,000 $ 21,000 $ 21,000 $ 51,000 $ 1,97,000 $2,17,000 $ 2,57,600 $ 6,71,600 $ 2,48,000 $2,38,000 $ 2,78,600 $ 7,22,600 A Cash Budget Seection 1: Cash Receipts Beginning Cash Balance Add: Cash Receipts Total Cash Available Section 2: Cash Payments For Inventory Purchases For S&A Expenses For Interest Expense Total Budgeted Disbursements Section 3: Financing activities Surplus(Shortage) Borrowings(Repayments) Ending Cash Balance $ 1,74,026 $ 1,48,730 $ 1,82,652 $ 5,05,408 $ 63,000 $ 69,060 $ 69,932 $ 2,01,992 $ - $ 100 $ 109 $ 209 $ 2,37,026 $ 2,17,890 $ 2,52,693 $ 7,07,609 $ $ $ 10,974 $ 10,026 $ 21,000 $ 20,110 $ 890 $ 21,000 $ 25,907 $ 4,907 $ 21,000 $ 14,991 6,009 21,000

Surplus for September = Total Cash available - Total Budgeted Disbursements = 278,600 - 252,693 = $ 25,907 Repayment for September = Surplus fund available - Desired Ending Cash Balance = 25,907 - 21,000 = $ 4,907

B&C Vernon's Dress Shop Statement of Cash Flows (Partial) For the Quarter ended 30th September $ 6,71,600 Cash flows from operating activities Cash Receipts from Customers Less Cash Payments: For Inventory Purchases For S&A Expenses Net cash flow used in operating activities $-5,05,408 $-2,01,992 $ -35,800 Vernon's Dress Shop Statement of Cash Flows (Partial) For the Quarter ended 30th September Cash flows from financing activities Funds from Borrowings Less Interest Paid Net cash flow from financing activities $ $ 6,009 -209 $ 5,800