The accountant for Erica€™s Dress Shop prepared the following cash budget. Erica€™s 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. Round all computations to the nearest whole dollar.
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.
c. Determine the amount of net cash flows from financing activities Erica€™s will report on the third quarter pro forma statement of cashflows.

Transcribed Image Text:

Cash Budget July August September Section 1: Cash receipts Beginning cash balance Add cash receipts 50,000 ? 180,000 200,000 240,600 Total cash available (a) Section 2: Cash payments 230,000 For inventory purchases For S&A expenses For interest expense 165,500 140,230 60,560 174,152 61,432 54,500 220,000 10,000 Total budgeted disbursements (b) Section 3: Financing activities _ Surplus (shortage) Borrowing (repayments) (c) 10,000 _ Ending cash balance (a - b+c) 20,000 20,00020,000