Question

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 $526,800 407,500 476,00e payments $473,900 355,400 529,000 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 interést 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 indiceted with minus sign.)

Answer 1

KAYAK COMPANY
Çash budget
For January, February and March
	January	February	March
Beginning cash balance	50000	50000	52711
Cash receipts	526000	407500	476000
Total cash available	576000	457500	528711
Cash payments	473900	355400	529000
Interest expense	1000	489	0
Preliminary cash balance	101100	101611	-289
Additional loan (loan repayment)	-51100	-48900	40289
Ending cash balance	50000	52711	40000
Loan balance
Loan balance- Beginning of month	100000	48900	0
Additional loan (loan repayment)	-51100	-48900	40289
Loan balance - End of month	48900	0	40289