Exercise 14-13: Preparing a Cash Budget (LO 14-5)
The accountant for Rooney's Dress Shop prepared the following cash budget. Rooney's desires to maintain a cash cushion of $17,000 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 3 percent per month.
Required: Complete the cash budget by filling in the missing amounts. Determine the amount of net cash flows from operating activities Rooney's will report on the third-quarter pro forma statement of cash flows. Determine the amount of net cash flows from financing activities Rooney's will report on the third-quarter pro forma statement of cash flows.
Cash Budget
July
August
September
Section 1: Cash receipts
Beginning cash balance
$49,000
$17,000
$17,000
Add cash receipts
$193,000
$213,000
$253,600
Total cash available
$242,000
$230,000
$270,600
Section 2: Cash payments
For inventory purchases
$172,026
$146,730
$180,652
For S&A expenses
$61,000
$67,060
$67,932
For interest expense
$0
Total budgeted disbursements
$233,026
Section 3: Financing activities
Surplus (shortage)
$8,974
Borrowing (repayments)
$8,026
Ending cash balance
$17,000
$17,000
$17,000
Determine the amount of net cash flows from both operating and financing activities Rooney's will report on the third-quarter pro forma statement of cash flows. (Round intermediate calculations and final answers to the nearest whole dollar amount.)
b. Net cash (operating activities)
c. Net cash (financing activities)
