Question

A cash budget, by quarters, is given below for a retail company (000 omitted). The company requires a minimum cash balance of at least $5,000 to start each quarter. Fill in the missing amounts. (Enter your answers in thousands of dollars. Cash deficiencies and Repayments should be indicated by a minus sign.) Answer is complete but not entirely correct. Cash Budget 1 $ $ Cash balance, beginning Add collections from customers $ Quarter (000 omitted) 2 3 $ 5 $ 5 88 X 97 93 102 7 84 X 80 4 5 101 X 106 Year 7 335 342 Total cash available Less disbursements: 45 28 155 Purchase of inventory Selling and administrative expenses Equipment purchases 30 117 20 10 11 38 Dividends 2 2 8 88 60 318 14 58 46 46 X 7 16 Total disbursements Excess (deficiency) of cash available over disbursements Financing: Borrowings Repayments (including interest) * Total financing Cash balance, ending *Interest will total $1,000 for the year. 23 66,250 X 16 X 90 X 25 X 70 X 5 43 X (15) 41 X 5% $ 90 X 5 0 X 5 $ $ $ $ 19 X

Answer 1

Correct Answer:

	Quarter (000 omitted)				(000 omitted)
	1	2	3	4	year
Cash Balance Beginning	$               7.00	$       5.00	$       5.00	$              5.00	$             7.00
Add: Collection from Customers	$            73.00	$    72.00	$    97.00	$            93.00	$        335.00
Total Cash Available	$            80.00	$    77.00	$ 102.00	$            98.00	$        342.00
Less: Disbursements
Purchase of Inventory	$            36.00	$    46.00	$    45.00	$            28.00	$        155.00
Selling and Administrative expenses	$            37.00	$    30.00	$    30.00	$           20.00	$        117.00
Equipment purchases	$               7.00	$    10.00	$    11.00	$            10.00	$           38.00
Dividends	$               2.00	$       2.00	$       2.00	$              2.00	$             8.00
Total Disbursements	$            82.00	$    88.00	$    88.00	$            60.00	$        318.00
Excess (deficiency) of cash	$            (2.00)	$ (11.00)	$    14.00	$            38.00	$           24.00
Financing					$                  -
Borrowing	$               7.00	$    16.00		$                   -	$           23.00
repayments (including interest)			$    (9.00)	$         (15.00)	$        (24.00)
Total Financing	$               7.00	$    16.00	$    (9.00)	$         (15.00)	$           (1.00)
					$                  -
Cash Balance Ending	$               5.00	$       5.00	$       5.00	$            23.00	$           23.00

End of answer.

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