Exercise 22-17 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 $525,000 400,000 450,000 Cash payments $475,000 350,000 525,000 According to a credit agreement with its bank, Kayak requires a minimum cash balance of $30,000 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 $30,000 on the last day of each month. The company has a cash balance of $30,000 and a loan balance of $60,000 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 Beginning cash balance $ 30,000 $ 30,000 Cash receipts 525,000 400,000 Total cash available 555.000 430,000 Cash payments 475,000 350,000 Interest expense 600 106 Preliminary cash balance 79,400 79,894 Additional loan (loan repayment) Ending cash balance $ 30,000 $ 69,294 March 69,294 450,000 519,294 525,000 0 $ 30,000 Loan balance $ 60,000 $ 10,600 $ 0 Loan balance - Beginning of month Additional loan (loan repayment) Loan balance - End of month $ 10,600 $ 0 $ 35,706