Minicase Chapter 20 - Minicase Chapter 20 Question(1 In...

Minicase Chapter 20
Question (1)
In order to prepare the Cash budget, the cash flow for each quarter should be calculated.
The calculation is as follows:
Q1 cash flow = (1 - .10) ($426,000) + [(90 - 53)/90]($695,000) - (.50)($695,000)(53/90)
-[(90 - 53/90]($354,000) - (.25)($695,000) - $85,000
The cash flow for Ql = $29,311.07
Q2 cash flow = (57/90) ($695,000) + [(90 - 53)/90] ($708,000) – [(90 - 53)/90]($370,500)
- (53/90) ($354,000) - (.25)($708,000) - $85,000
The cash flow for Q2 = $76,983.28
Q3 cash flow = (57/90) ($708y000) + [(90 - 57)/90]($741,000) – [(90 - 53)/90]($378,500)
- (53/90) ($370,500) - (.25) ($741,000) - $85,000
The cash flow for Q3 = $76,061.07
Q4 cash flow = (57/90)($741,000) + ((90 - 57)/90]($757,000) - [(90 - 53)/90] ($392,000)
- (53/90)($378,500) - (.25)($757,000) - $85,000 - 240,000
The cash flow for Q4 = -$ 151,432.95
Quarterly cash balance is as follows:
Piepkorn Manufacturing
Cash Budget
Q1 Q2 Q3 Q4
Beginning cash balance $164,000.00 $193,311.07 $270,294.35 $346,355.42
Net cash inflow $ 29,311.07 $ 76,983.28 $ 76,061.07 -$151,432.95
Ending cash balance $193,311.07 $270,294.35 $346,355.42 $194,922.47
Minimum cash balance $100,000.00 $100,000.00 $100,000.00 $100,000.00
Cumulative Surplus
(deficit)
$ 93,311.07 $170,294.35 $246,355.42 $ 94,922.47

Piepkorn Manufacturing
Short-Term Financial Plan
Q1 Q2 Q3 Q4
Beginning Cash Balance $100,000.00 $100,000.00 $100,000.00 $100,000.00
Net cash inflow 29,311.07 76,983.28 76,061.07 -151,432.95
New short-term investments -29,951.11 -77,922.79 -77,779.81 0
Income on short-term
investments
640.00 939.51 1,718.74 2,496.54
Short-term investments sold 0 0 0 148,936.80
New short-term borrowing 0 0 0 0
Interest on short-term
borrowing
0 0 0 0
Short-term borrowing
repaid
0 0 0 0
Ending cash balance
Minimum
$100,000.00 $100,000.00 $100,000.00 $100,000.00
Minimum cash balance -$100,000.00 -$100,000.00 -$100,000.00 -$100,000.00
Cumulative surplus (deficit) 0 0 0 0
Beginning short-term
investments
$64,000.00 $93,951.07 $171,873.86 $249,653.67
Ending short-term
investments
$93,951.07 $171,873.86 $249,653.67 $100,716.93
Beginning short-term debt 0 0 0 0
Ending short-term debt 0 0 0 0
The interest calculations for each quarter are as follows:
Surplus at the beginning of the
quarter
Cumulative amount Earnings/ Cash
Cost
Q1 $64,000.00 x .01 = $640.00 $640.00
Q2 $93,311.07 + $640.00 = $93,951.07 x
.01 = $939.51
$939.51
Q3 $170,294.34+$640+$939.51 =
$171,873.86 x .01 = $1718.74
$1718.74
Q4 $246,355.42 + $640 +$939.51+
$1718.74 = $249,653.67 x .01
=$2496.54
$2496.54