Question

Kayak Co. budgeted the following cash receipts (excluding cash receipts from loans received) and cash payments (excluding cash payments for loan principal and interest payments) for the first three months of next year. January February March Cash Receipts $ 520,000 409,500 476,000 Cash payments $463,500 353,000 535.000 According to a credit agreement with the company's bank, Kayak promises to have a minimum cash balance of $40,000 at each month-end. In return, the bank has agreed that the company can borrow up to $140,000 at a monthly interest rate of 1%, paid on the last day of each month. The interest is computed based on the beginning balance of the loan for the month. The company repays loan principal with any cash in excess of $40,000 on the last day of each month. The company has a cash balance of $40,000 and a loan balance of $80,000 at January 1. Prepare monthly cash budgets for January, February, and March. (Negative balances and Loan repayment amounts (if any) should be indicated with minus sign.) KAYAK COMPANY March Beginning cash balance Cash receipts Total cash available Cash payments Interest expense Cash Budget For January, February, and March January February $ 40,000 $ 40,000 520,000 409,500 560,000 449,500 (463,500) (353,000) (800)| (243) 05 700 96 257 Preliminary cash balance

Answer 1

Question 1

Solution

KAYAK COMPANY
Cash Budget
for January February and March
	January	February	March
Beginning Cash Balance	$ 40,000	$ 40,000	$ 71,957
Cash receipts	$ 520,000	$ 409,500	$ 476,000
Total Cash Available	$ 560,000	$ 449,500	$ 547,957
Cash payments	$ 463,500	$ 353,000	$ 535,000
Interest Expense	$ 800	$ 243
Preliminary cash balamce	$ 95,700	$ 96,257	$ 12,957
Additional loan (Loan Repayments)	-$ 55,700	-$ 24,300	$ 27,043
Ending Cash Balance	$ 40,000	$ 71,957	$ 40,000
Loan Balance
Loan Balance -Beginning of Month	$ 80,000	$ 24,300	$ 0
Additional Loan (Loan Repayment)	-$ 55,700	-$ 24,300	$ 27,043
Loan Balance End of Month	$ 24,300	$ 0	$ 27,043

Question 2

Solution

Electro Company
Direct material Budget
Second Quarer
Budgeted Production (unis)	670000
Raw material required per unit (Lbs)	0.8
Material needed for Production (lbs)	536000
Budgeted Ending Inventory (lbs)	119200*
Total material requirements (lbs)	655200
Beginning Inventory (Lbs)	107200
Material to be Purchased (lbs)	548000
Cost per lb.	1.92
Total budgeted direct material cost	$ 1,052,160.00

*745000 x .08 x 20%