Question

Help Save Kavak 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 Receipts $525,000 44,000 454,000 payments $467,400 346,400 530,000 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 KAYAK COMPANY Cash Budget Cash Budget For January, February, and March January February $ 40,000 525.000 404.000 565.000 March Beginning cash balance Cash receipts Total cash available 346 Prey Next Search

Answer 1

Kayak Company
Cash Budget
For January, February and March
	January		February		March
Beginning Cash Balance	$40,000		$40,000		$74,168
Cash Receipts	$525,000		$404,000		$454,000	($74168+$454000)
Total Cash Available	$565,000	($40000+$525000)	$444,000	($40000+$404000)	$528,168
Cash Payments	($467,400)		($346,400)		($530,000)
Interest Expense	($800)		($232)		0
Preliminary Cash Balance	$96,800	(565000-$467400-$800)	$97,368	($444000-$346400-$232)	($1,832)	($528168-$530000)
Additional loan (loan repayment)	($56,800)		($23,200)		41832
Ending cash balance	$40,000	($96800-$56800)	$74,168	($97368-$23200)	$40,000	(-$1832+$41832)
Loan Balance
Loan Balance-Beginning of Month	$80,000		$23,200		0
Additional loan(loan repayment)	($56,800)		($23,200)		41832	(-$1832+$40000)
Loan Balanxe-End of Month	$23,200		$0		41832
Interest Expense
January	$80000*1%		$   800.00
February	$23200*1%		$   232.00