Question

The accountant for Adams’s Dress Shop prepared the following cash budget. Adams’s desires to maintain a cash cushion of $15,000 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

1. Complete the cash budget by filling in the missing amounts.

2. Determine the amount of net cash flows from operating activities Adams’s will report on the third quarter pro forma statement of cash flows.

3. Determine the amount of net cash flows from financing activities Adams’s will report on the third quarter pro forma statement of cash flows.

Complete this question by entering your answers in the tabs below.

Complete the cash budget by filling in the missing amounts. (Any shortages or 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 $43,000 $15,000 $15,000 Add cash receipts 181,000 201,000 241,600 Total cash available 224,000 216,000 256,600 Section 2: Cash payments For inventory purchases 166,026 140,730 174,652 For S&A expenses 55,000 61,060 61,932 For interest expense 0 Total budgeted disbursements 221,026 Section 3: Financing activities Surplus (shortage) 2,974 Borrowing (repayments) 12,026 Ending cash balance $15,000 $15,000 $15,000

• Req B and C

Determine the amount of net cash flows from both operating and financing activities Adams'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)

Answer 1

Req A:
Cash Budget
				JULY	AUG	SEP
Section-1 Cash receipts
Beginning Cash balance				43000	15000	15000
Add: Cash receipts				181000	201000	241600
Total cash available				224000	216000	256600
Section-2 Cash payments
For inventory purchases				166026	140730	174652
For S& A expense				55000	61060	61932
For interest expense				0	361	395
Total budget Disbursement				221026	202151	236979
Section-3 Financing Activities
Surplus/(Shortage)				2974	13849	19621
Borrowing/(repayment)				12026	1151	-4621
Ending cash balance				15000	15000	15000
Req B:
Cashflows from Operating Activities:
Total cash receipts from revenue (181000+201000+241600)						623600
Payment of inventory (166026+140730+174652)						-481408
Payment of Sselling andn Admin expense						-177992
Net cash used in operating activities							-35800
Req C:
Cash flows from Investing Activities:
Interest paid (361+1226)						-756
Borrowing from bank (12026+28849)						13177
Repayment of bank loan						-4621
Net Cash provided from Investing Activities							7800