Question

Check my work Exercise 07-17 Preparation of cash budgets (for three periods) LO P2 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. Cash Receipts $524,000 402,000 455,000 Cash payments $465,300 343,300 530,000 January February March According to a credit agreement with its bank, Kayak requires a minimum cash balance of $50,000 at each month-end. In return, the bank has agreed that the company can borrow up to $150,000 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 $50,000 on the last day of each month. The company has a cash balance of $50,000 and a loan balance of $100,000 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 Cash Budget For January, February, and March February March January 50,000 S 50.000 Beginning cash balance $

Answer 1

	KAYAK COMPANY
	Cash Budget
	For January, February, and March
	January	February	March
Beginning cash balance	50000	50000	65977
Cash receipts	524000	402000	455000
Total cash available	574000	452000	520977
Cash disbursements	465300	343300	530000
Interest expense	1000	423	0
Preliminary cash balance	107700	108277	-9023
Additional loan (loan repayment)	-57700	-42300	59023
Ending cash balance	50000	65977	50000
	Loan balance
Loan balance ­ Beginning of month	100000	42300	0
Additional loan (loan repayment)	-57700	-42300	59023
Loan balance ­ End of month	42300	0	59023
Note:
Interest expense January = 100000*1% = 1000
Interest expense February = 42300*1% = 423