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 $521,000 411,000 461,000 Cash payments $463,400 353,400 522,000 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.) KAYAK COMPANY Cash Budget For January, February, and March January February $ 40,000 March Beginning cash balance Total cash available Preliminary cash balance Ending cash balance Loan balance Loan balance - Beginning of month 80,000 Additional loan (loan repayment) Loan balance - End of month Exercise 20-18 Budgeted cash receipts LO P2 Jasper Company has sales on account and for cash. Specifically, 59% of its sales are on account and 41% are for cash. Credit sales are collected in full in the month following the sale. The company forecasts sales of $516,000 for April, $526,000 for May, and $551,000 for June. The beginning balance of Accounts Receivable is $307,900 on April 1. Prepare a schedule of budgeted cash receipts for April, May, and June. April May June Cash sales 41% 59% Sales on account Total sales JASPER COMPANY Schedule of Cash Receipts For April, May, and June April May June Cash receipts from: Cash sales Collection of accounts receivable Total budgeted cash receipts Exercise 20-19 Budgeted cash payments LO P2 Zisk Co. purchases raw materials on account. Budgeted purchase amounts are April, $84,000; May, $114,000; and June, $124,000. Payments are made as follows: 75% in the month of purchase and 25% in the month after purchase. The March 31 balance of accounts payable is $26,000. Prepare a schedule of budgeted cash payments for April, May, and June. April May June 75% Current month purchases Ending accounts payable 25% Total purchases Zisk Co. Schedule of Cash Payments For April, May, and June April May June Cash payments for: Current month purchases Prior month purchases Budgeted cash payments for materials