Return to question Exercise 20-17 (Algo) Preparation of cash budgets (for three periods) LO P2 Kayak Company 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 Cash payments $ 527,000 408,000 455,000 $ 476,000 357,000 526,000 Kayak requires a minimum cash balance of $40,000 at each month-end. Loans taken to meet this requirement charge 1%, interest per month, paid at each month-end. The interest is computed based on the beginning balance of the loan for the month. Any preliminary cash balance above $40,000 is used to repay loans at month-end. 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.) Beginning cash balance Add: Cash receipts KAYAK COMPANY Cash Budget January February March $ 40,000 $ 40,000 527,000 408,000 567,000 448,000 Total cash available Less: Cash payments for All items excluding interest 476,000 357,000 526,000 Interest on loan 600 106 Total cash payments 476,600 357,106 526,000 Preliminary cash balance 79,400 79,894 (5,706) Loan activity Additional loan (loan repayment) (49,400) (10,600) 5,706 X Ending cash balance $ 30,000 $ 69,294 Loan balance Loan balance - Beginning of month Additional loan (loan repayment) Loan balance, end of month $ 80,000 $ 10,600 $ (49,400) $ 10,600 (10,600) 0 5,706