Question

According to a credit agreement with bankKayak requires a minimum cash balance of $40,000 each month-end. In return, the bank has agreed that the company can borrow up to $150.00 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 each monthThe company has a cash balance of $40,000 and a loan balance of $80,000 at January 1

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 $524,000 401,000 464.000 Cash payments 5468,600 345,600 525,000 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 $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 $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 Loon repayment amounts (if any) should be indicated with minus sign.) March 464 000 KAYAK COMPANY Cash Budget For January, February, and March January February Beginning cash balance $ 10.000s 40.000 Cash receipts 524.000 401.000 Total cash available 564.000 441,000 Cash payments 468.600 345.600 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 525.000

Answer 1

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March $69,746 Ansor KAYAK COMPANY Cash Budget i for January February and masei January February Beginning osh Balance $40,000 $402006 Cash receipts $524,000 $401000 | Total Cash Available 564,000 $441,000 Cash payments . C$468,600) C4345, 600) Interest Expense ($800) ($254) I freliminary Cash Balance $94,600 $95, 146. Adalitional loan ( loan grepsupuerit) ($54,600) 1($25,400) Ending Gsh Belance $40,000 $69,746 Loan Balance Loan Balance beginning of Menth $80000 $25,400 $ 464,070 $533,746 C$525,000) | $0 88746 $31254 $40,000 Additional hean (loan Repayment ($ 54,600) I ($25,400) & 31,254 loan Balance and of mouth | $25,400 | $31,254 Onterest Expense Jones January & $80,000x 14 = 800 Interast Expense for debruarye $80,000 - $54,600 $- $2454,00 %1%. 254