Exercise 7-17 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 $521,000 410,500 459,000 Cash payments $467,800 357,300 526,000 According to a credit agreement with the company's bank, Kayak promises to have a minimum cash balance of $50,000 at each month-end. In return, the bank has agreed that the company can borrow up to $160,000 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 $50,000 on the last day of each month. 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.) March 459,000 526,000 KAYAK COMPANY Cash Budget For January, February, and March January February Beginning cash balance $ 50,000 $ 50,000 Cash receipts 521,000 410,5001 Total cash available 571,000 460,500 Cash payments 467,800 357,300 Interest expense (1,000) Preliminary cash balance Additional loan (loan repayment) Ending cash balance $ 50,000 $ Loan balance Loan balance - Beginning of month $ 100,000 $ Additional loan (loan repayment) Loan balance - End of month 1501 50,000 0