Acc202 Survey of Accounting: E14-13 The accountant for Teresa’s Dress Shop prepared

Acc202 Survey of Accounting

Exercise 14-13 Preparing a cash budget
The accountant for Teresa’s Dress Shop prepared the following cash budget. Teresa’s desires to maintain a cash cushion of $14,000 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 2 percent per month.
Cash Budget July August September
Section 1: Cash receipts Beginning cash balance 42,500
Add cash receipts 180,000 200,000 240,600
Total cash available (a) Section 222,500 200,000 240,600
2: Cash payments
For inventory purchases 165,526 140,230 174,152
For S&A expenses 54,500 60,560 61,432
For interest expense -
Total budgeted disbursements (b) Section 220,026 200,790 235,584
3: Financing activities
Surplus (shortage) 2,474
Borrowing (repayments) © 11,526
Ending cash balance (a – b + c) $14,000 $14,000 $14,000

Required:
a. Complete the cash budget by filling in the missing amounts. Round all computations to the nearest whole dollar.
b. Determine the amount of net cash flows from operating activities Teresa’s will report on the third quarter pro forma statement of cash flows.
c. Determine the amount of net cash flows from financing activities Teresa’s will report on the third quarter pro forma statement of cash flows.
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