Question

I do not know how to find the beginning balance for the 3rd or 4th quarter.. i keep getting it wrong. Also how do I find interest for the 2nd quarter (blank spot where it is supposed to be).

Garden Depot is a retailer that is preparing its budget for the upcoming fiscal year. Management has prepared the following summary of its budgeted cash flows:

	1st Quarter		2nd Quarter		3rd Quarter		4th Quarter
Total cash receipts	$	230,000	$	380,000	$	260,000	$	280,000
Total cash disbursements	$	295,000	$	265,000	$	255,000	$	275,000

The company’s beginning cash balance for the upcoming fiscal year will be $30,000. The company requires a minimum cash balance of $10,000 and may borrow any amount needed from a local bank at a quarterly interest rate of 3%. The company may borrow any 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.

Required:

Prepare the company’s cash budget for the upcoming fiscal year. (Repayments, and interest, should be indicated by a minus sign.)

Answer is not complete Garden Depot Cash Budget 3rd Quarter Quarter 4th 1st Quarter $ 30,000 10,000 230,000 260,000 295,000 (35,000) 2nd Quarter Year Beginning cash balance Total cash receipts Total cash available Total cash disbursements Excess of cash available over disbursements Financing. 380,000 260,000280,000 1,150,000 280,000 1,150,000 265,000255,000 275,0001,090,000 60,000 390,000 260,000 125,000 5,000 5,000 Borowings Repayments Interest 45,000 45,000 (45,000) 001 (45,000) Total financing Ending cash balance 45,000(45,000) 80,000 $10,000 5,000 $ 5,000$ 60,000

Answer 1

Particular	1st	2nd	3rd	4th	year
Beginning cash balance	$30,000	$10,000	$77,300	$82,300
Total cash receipt	$230,000	$380,000	$260,000	$280,000
Total cash available	$260,000	$390,000	$337,300	$362,300
Total cash Disbursement	$295,000	$265,000	$255,000	$275,000
Excess of cash	$(35,000)	$125,000	$82,300	$87,300
Financing
Borrowing	$45,000	$0	$0	$0
Repayment	$0	$(45,000)	$0	$0
Interest	$0	$(2,700)	$0	$0
Total financing	$45,000	$(47,700)	$0	$0
Ending cash balance	$10,000	$77,300	$82,300	$87,300

Interest = ($45,000*3%)*2

= $2,700

*2 because borrow at starting of the quarter and paid at the end.