Question

ch 7 exer #2

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.)

Cash Budget	Quarter (000 omitted)
	1	2	3	4	Year
Cash balance, beginning	$8
Add collections from customers			102		357
Total cash available	83
Less disbursements:
Purchase of inventory	41	51		33
Selling and administrative expenses		32	30		112
Equipment purchases	13	8	16		47
Dividends	2	2	2	2
Total disbursements		93
Excess (deficiency) of cash available over disbursements	(3)		11
Financing:
Borrowings		11
Repayments (including interest) *				(14)
Total financing
Cash balance, ending
*Interest will total $1,000 for the year.

Answer 1

Solution:

Cash Budget	Quarter (000 omitted)
	1	2	3	4	Year
Cash balance, beginning	$8	5	5	5	8
Add collections from customers	$75	82	102	$98	357
Total cash available	83	87	107	$103	365
Less disbursements:
Purchase of inventory	41	51	48	33	173
Selling and administrative expenses	30	32	30	20	112
Equipment purchases	13	8	16	10	47
Dividends	2	2	2	2	8
Total disbursements	86	93	96	65	340
Excess (deficiency) of cash available over disbursements	-3	-6	11	$38	25
Financing:
Borrowings	8	11	0		19
Repayments (including interest) *			-6	-14	-20
Total financing	8	11	-6	-14	-1
Cash balance, ending	5	5	5	$24	24

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