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.

	Cash Receipts	Cash payments
January	$ 523,000	$ 469,800
February	411,000	357,800
March	463,000	529,000

Kayak requires a minimum cash balance of $40,000 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 $40,000 is used to repay loans at month-end. 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.)

\begin{tabular}{|c|c|c|c|c|} \hline \multicolumn{5}{|c|}{ KAYAK COMPANY } \\ \hline \multicolumn{5}{|c|}{ Cash Budget } \\ \hline & \multicolumn{2}{|c|}{ January } & February & March \\ \hline Beginning cash balance & $ & 40,000 & 40,000 & \\ \hline Add: Cash receipts & & 523,000 & 411,000 & 463,000 \\ \hline Total cash available & & 563,000 & 451,000 & \\ \hline \multicolumn{5}{|l|}{ Less: Cash payments for } \\ \hline All items excluding interest & & 469,800 & & \\ \hline Interest on loan & & 800 & & \\ \hline Total cash payments & & 470,600 & 0 & 0 \\ \hline \multicolumn{5}{|l|}{ Preliminary cash balance } \\ \hline \multicolumn{5}{|l|}{ Loan activity } \\ \hline \multicolumn{5}{|l|}{ Additional loan (loan repayment) } \\ \hline \multicolumn{5}{|l|}{ Ending cash balance } \\ \hline \multicolumn{5}{|c|}{ Loan balance } \\ \hline Loan balance - Beginning of month & $ & 80,000 & & $ \\ \hline \multicolumn{5}{|l|}{ Additional loan (loan repayment) } \\ \hline Loan balance, end of month & & & & \\ \hline \end{tabular}