Question
1. Garden Depot is a retailer that is preparing its budget for the upcoming fiscal year. Management has prepared the following summary of its budgeted
1. 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 | $ 280,000 | $ 430,000 | $ 310,000 | $ 330,000 |
Total cash disbursements | $ 330,000 | $ 300,000 | $ 290,000 | $ 310,000 |
The companys beginning cash balance for the upcoming fiscal year will be $40,000. 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 companys cash budget for the upcoming fiscal year.
Note: Repayments, interest, and cash deficiencies should be indicated by a minus sign.
2.
Gig Harbor Boating is the wholesale distributor of a small recreational catamaran sailboat. Management has prepared the following summary data to use in its annual budgeting process:
Budgeted unit sales | 660 |
---|---|
Selling price per unit | $ 2,050 |
Cost per unit | $ 1,480 |
Variable selling and administrative expense (per unit) | $ 85 |
Fixed selling and administrative expense (per year) | $ 245,000 |
Interest expense for the year | $ 21,000 |
Required:
Prepare the companys budgeted income statement for the year.
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