exercise 20-17 preparation of cash budget (for three periods) LO P2

Exercise 20-17 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 $523,000 406,000 477,000 Cash payments $463,200 346,200 521,000 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 $140,000 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 KAYAK COMPANY Cash Budget For January, February, and March January February S 40,000 $ 40,000 523,000 406,000 563,000 446,000 (463,200) (346.200 Beginning cash balance Cash receipts Total cash available Cash payments 477.000 (521,000) bank has agreed that the company can borrow up to $140,000 at a monthly Interest rate of 1%, paid on the last day of each month. The rest 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 477,000 (521.000) KAYAK COMPANY Cash Budget For January February, and March January February Beginning cash balance $ 40,000 $ 40,000 Cash receipts 523,000 406,000 Total cash available 563,000 446,000 Cash payments (463,200 (346,200 Interest expense Preliminary cash balance Additional loan (loan repayment) Ending cash balance Loan balance Loan balance - Beginning of month $ 80,000 Additional loan (loan repayment) Loan balance - End of month TH