Exercise 20-17 (Algo) Preparation of cash budgets (for three periods) LO P2 Kayak Company 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 Cash payments $ 523,000 408,500 480,000 $ 468,700 354,200 521,000 Kayak requires a minimum cash balance of $50,000 at each month-end. Loans taken to meet this requirement charge 1%, interest per month, paid at each month-end. The interest is computed based on the beginning balance of the loan for the month. Any preliminary cash balance above $50,000 is used to repay loans at month-end. 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 indicated with minus sign.) KAYAK COMPANY Cash Budget January February March Beginning cash balance Add: Cash receipts $ 50,000 $ 50,000 523,000 408,500 480.000 Total cash available 573,000 458,500 Less: Cash payments for Interest on loan (1,000) All items excluding interest. 468,700 Total cash payments 467,700 0 Preliminary cash balance 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 Beginning cash balance. Add: Cash receipts Total cash available Cash Budget January February March $ 50,000 $ 50,000 523,000 408,500 480,000 573,000 458,500 Less: Cash payments for Interest on loan (1,000) All items excluding interest 468,700 Total cash payments 467,700 0 Preliminary cash balance Loan activity Additional loan (loan repayment) Ending cash balance Loan balance-Beginning of month Additional loan (loan repayment) Loan balance, end of month $ 50,000 Loan balance $ 100,000 $