Question

Ch 07 Ex 7-17 Saved Help Save According to a credit agreement with its bank, Kayak requires 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. 15 points Prepare monthly cash budgets for January, February, and March. (Negative balances and Loan repayment amounts (if any) should be indicated with minus sign.) eBook March Hint 469,000 Ask 530,000 KAYAK COMPANY Cash Budget For January, February, and March January February Beginning cash balance $ 40,000 $ 40,000 Cash receipts 526,000 402,000 Total cash available 566,000 442,000 Cash payments 467,300 343,300 Interest expense 800 Preliminary cash balance Additional loan (loan repayment) Ending cash balance $ 40,000 Loan balance Loan balance - Beginning of month $ 80,000 Additional loan (loan repayment) Loan balance - End of month Print References

Answer 1

	KAYAK COMPANY
	Cash Budget
	For January, February, and March
	January	February	March
Beginning cash balance	40000	40000	76379
Cash receipts	526000	402000	469000
Total cash available	566000	442000	545379
Cash disbursements	467300	343300	530000
Interest expense	800	221	0
Preliminary cash balance	97900	98479	15379
Additional loan (loan repayment)	-57900	-22100	24621
Ending cash balance	40000	76379	40000
	Loan balance
Loan balance ­ Beginning of month	80000	22100	0
Additional loan (loan repayment)	-57900	-22100	24621
Loan balance ­ End of month	22100	0	24621
Note:
Interest expense January = 80000*1% = 800
Interest expense February = 22100*1% = 221