Question

Saved Help Save & CI 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 Cash Receipts $524,000 405,500 465,000 payments January February March $467,500 349,000 532,000 According to a credit agreement with its bank, Kayak requires a minimum cash balance of $30,000 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 $30,000 on the last day of each month. The company has a cash balance of $30,000 and a loan balance of $60,000 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 January February March $ 30,000 30,000 S 60,000 Beginning cash balance Cash receipts 524,000 405,500 465,000 554,000 435,500 525,000 Total cash available (467,500) (349,000) 532,000 Cash payments 600 565 Interest expense

Answer 1

KAYAK Company Cash Budget For January, February and March January February March Beginning Cash Balance Cash Receipts Total Cash Receipts Cash Payments Interest Expenses Preliminary Cash balance Additional Laon (Loan Payment) Ending Cash Balance 30000 30000 82364 405000 465000 435000 547364 -349000-532000 524000 554000 -467000 -600 -36 0 85964 86400 15364 -56400 -3600 -14636 30000 82364 30000 Loan Balance Loan Balance -Beginning of Month Additional Loan (Loan Payment) Loan balance - End of Month 60000 3600 0 -56400 14636 -3600 3600 0 14636 Loans January 86400-30,000= 56400(Payment) February 3600 (Payment) March 14636(Loan taken)