Reference no: EM131291888
The accountant for Erica’s Dress Shop prepared the following cash budget. Erica’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 2 percent per month.
Cash Budget July August September
Section 1: Cash receipts Beginning cash balance $44,000
Add cash receipts 183,000 203,000 243,600
Total cash available 227,000
Section 2: Cash payments
For inventory purchases 167,0261 41,730 175,652
For S&A expenses 56,000 62,060 62,932
For interest expense 0
Total budgeted disbursements 223,026
Section 3: Financing activities
Surplus (shortage) 3,974
Borrowing (repayments) 13,026
Ending cash balance $17,000 $17,000 $17,000
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.)
b. Determine the amount of net cash flows from operating activities Erica’s 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.)
c. Determine the amount of net cash flows from financing activities Erica’s 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.)
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