Return to question Exercise 07-17 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. Cash Cash Receipts payments January $522,000 $469,900 February 410, 500 358,400 March 461,000 525, 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 $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 $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.) Answer is not complete. KAYAK COMPANY nthly interest rate of 1%, paid on the last day of each mon interest is computed based on the beginning balance of the loan for the month. The company repays loan principal with any cas 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 January 1. Prepare monthly cash budgets for January, February, and March (Negative balances and Loan repayment amounts (if any) sho indicated with minus sign.) Answer is not complete. March $ KAYAK COMPANY Cash Budget For January, February, and March January February Beginning cash balance s 40,000 $ 40,000 522,000 410,500 Total cash available 562,000 450,500 Cash payments 469,900 (358,400) Interest expense (800) (287) Preliminary cash balance 91,300 91,313 x 62,613 461,000 523,613 (525,000) 1.387 0 % > KAYAK COMPANY March 62,613 x Cash Budget For January, February, and March January February Beginning cash balance $ 40,000 $ 40,000 $ 522,000 410,500 Total cash available 562,000 450,500 Cash payments 469,900 (358,400) Interest expense (800) (287) Preliminary cash balance 91,300 91,313 x Additional loan (loan repayment) (51,300) (28,700) Ending cash balance $ 40,000 $ 62,613 x $ 461,000 523,613 (525,000) 1,387 x 0 x 41,387 x 40,000 Loan balance $ 80,000 $ 28,700 $ 0 Loan balance - Beginning of month Additional loan (loan repayment) (28,700) 41,387 (51,300) 28,700 Loan balance - End of month $ 41,387