Cash Budget $-$ estimates cash inflows and outflows, to determine whether there is a cash shortfall, and whether

the company will be required to borrow money.

College Supplies 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:

The company's beginning cash balance for the upcoming fiscal year will be $$60,000.$

The company requires a minimum cash balance of $$20,000$ and may borrow any amount needed from a local bank at a quarterly interest rate of $2\%($or $8\%$ annual interest rate$).$

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.

a Prepare the company's cash budget for the upcoming fiscal year by quarter.

Show the reconciliation for total year, as well.

Beginning cash balance

Total cash receipts

Total cash available

Total cash disbursements

Excess $($deficiency$)$ of cash available over disbursements

Financing:

Borrowings

Repayments

Interest

Total financing

Ending cash balance

b Looking at the quarter the borrowings were paid back, why were they not paid back sooner?

c Looking at the budgeted cash inflows and outflows given in the problem, can you make any

recommendations on how they could try to avoid borrowings in the future?