Question

Kayak Co. budgeted the following cash receipts (excluding cash receipts from loans received) and cash payments...

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
Cash
payments
January $ 518,000 $ 462,600
February 409,500 354,100
March 475,000 529,000


According to a credit agreement with the company’s bank, Kayak promises to have 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

Homework Answers

Answer #1

Prepare monthly cash budgets for January, February, and March

January February March
Beginning balance 30000 30000 85348
Cash receipts 518000 409500 475000
Total cash available 548000 439500 560348
Less: Cash payment -462600 -354100 -529000
Less: Interest -600 -52 0
Total cash disbursement -463200 -354152 -529000
Preliminary cash balance 84800 85348 31348
Loan taken (repaid) -54800 0 0
Ending balance 30000 85348 31348
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