Question

Kayak Co. budgeted the following cash receipts (excluding cash receipts from loans recelved) and cash payments (excluding cash payments for loan principal and interest payments) for the first three months of next year. January February Cash Receipts $ 526,000 409,000 457,000 Cash payments $469,500 352,500 521,000 March 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%, pald 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.) March 457.000 KAYAK COMPANY Cash Budget For January, February, and March January February Beginning cash balance $ 40,000 S 40.000 Cash receipts 526,000| 409,000 Total cash available 566,000 449,000 Cash payments Interest expense Preliminary cash balance Additional loan (loan repayment) Ending cash balance Loan balance Loan balance - Beginning of month $ 80,000 Additional loan (loan repayment) Loan balance - End of month

Answer 1

KAYAK Company Cash Budget For January, February and March January February March Beginning Cash Balance 40000 40000 71957 Cash Receipts 526000 409000 457000 Total Cash Receipts 566000 449000 528957 Cash Payments -469500 -352500 -521000 Interest Expenses -800 -243 Preliminary Cash balance 9570096257 7957 Additional Laon (Loan Payment) -55700 -24300 -32043 Ending Cash Balance 40000 71957 40000 Loan Balance Loan Balance - Beginning of Month 80000 243001 Additional Loan (Loan Payment) -557001 -24300l 32043 Loan balance - End of Month 24300 0 32043 Loans January = 80000-55700=24300(Payment) February =22100(Payment) March = 32043(Loan taken)