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. January February March Cash Receipts $518,000 400, 500 459,000 Cash payments $ 460,400 342,900 534,000 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 Loan repayment amounts (if any) should be indicated with minus sign.) March 459,000 534,000 KAYAK COMPANY Cash Budget For January, February, and March January February Beginning cash balance $ 40,000 $ 40,000 Cash receipts 518,000 400,500 Total cash available 558,000 440,500 Cash payments 460,400 342,900 Interest expense 800 2321 Preliminary cash balance 96,800 97,368 Additional loan (loan repayment) Ending cash balance $ 40,000 $ 74,168 Loan balance Loan balance - Beginning of month $ 80,000 $ 23,200 Additional loan (loan repayment) Loan balance - End of month $ 23,200 $ 0 (832) $