Question
The accountant for Ericas Dress Shop prepared the following cash budget. Ericas desires to maintain a cash cushion of $20,000 at the end of each
The accountant for Ericas Dress Shop prepared the following cash budget. Ericas desires to maintain a cash cushion of $20,000 at the end of each month. Funds are assumed to be borrowed and repaid on the last day of each month. Interest is charged at the rate of 1 percent per month. |
Required |
a. | Complete the cash budget by filling in the missing amounts. (Any repayments should be indicated with a minus sign. Round your answers to the nearest whole dollar amount.) |
Cash Budget | July | August | September |
Section 1: Cash Receipts |
|
|
|
Beginning cash balance | $50,000 | $20,000 | $20,000 |
Add cash receipts | $180,000 | $200,000 | $240,600 |
Total cash available | $230,000 | $220,000 | $260,600 |
Section 2: Cash paymts |
|
|
|
For inventory purchases | $165,500 | $140,230 | $174,152 |
For S&A expenses | $54,500 | $60,560 | $61,432 |
For interest expense | 0 |
|
|
Total budgeted disbursements | $220,000 |
|
|
Section 3: Financing activities |
|
|
|
Surplus (shortage) | $10,000 |
|
|
Borrowing (repayments) | $10,000 |
|
|
Ending Cash balance | $20,000 | $20,000 | $20,000 |
b. Determine the amount of net cash flows from operating activities Ericas will report on the third quarter pro forma statement of cash flows. (Enter any cash outflows with a minus sign. Round intermediate calculations and final answer to the nearest whole dollar amount.) |
Net cash | outflow |
|
c. | Determine the amount of net cash flows from financing activities Ericas will report on the third quarter pro forma statement of cash flows. (Enter any cash outflows with a minus sign. Round intermediate calculations and final answer to the nearest whole dollar amount.) |
Net cash | inflow |
|
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started