Kayak Co budgeted the following cash receipts excluding cash

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
Receipts

Cash
payments

January

$

524,000

$

469,700

February

406,500

352,200

March

475,000

529,000

According to a credit agreement with the company’s bank, Kayak promises to have a minimum cash balance of $40,000 at each month-end. In return, the bank has agreed that the company can borrow up to $140,000 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

Cash Budget

For January, February, and March

January

February

March

Beginning cash balance

$40,000

$40,000selected answer correct

$40,000selected answer incorrect

Cash receiptsselected answer correct

524,000selected answer correct

406,500selected answer correct

not attempted

Total cash available

564,000

446,500

Cash paymentsselected answer correct

469,700selected answer correct

352,200selected answer correct

not attempted

Interest expenseselected answer correct

800selected answer correct

265selected answer correct

not attempted

Preliminary cash balance

93,500selected answer correct

94,035selected answer correct

not attempted

Additional loan (loan repayment)selected answer correct

(53,500)selected answer correct

not attempted

not attempted

Ending cash balance

$40,000selected answer correct

not attempted

$40,000selected answer correct

Loan balance

Loan balance - Beginning of month

$80,000

$26,500

$0

Additional loan (loan repayment)

(53,500)

Loan balance - End of month

$26,500selected answer correct

not attempted

not attempted

	Cash Receipts		Cash payments
January	$	524,000		$	469,700
February		406,500			352,200
March		475,000			529,000

Solution

Answer:

KAYAK COMPANY

Cash Budget

For January, February, and March

January

February

     March

Beginning cash balance

$40,000

40000

$67,735

Cash receipts

524,000

406,500

475,000

Total cash available

564,000

446,500

542,735

Cash disbursements

469,700

352,200

529,000

Interest expense

January ($80,000 x 1%)

800

February ($26,500 x 1%)

________

265

________

Preliminary cash balance

93,500

94,035

13,735

Additional loan from bank

26,265

Repayment of loan to bank

-53,500

-26,300

Ending cash balance

$40,000

$67,735

$40,000

Ending loan balance

$26,500

$0

$26,265

Jan

Feb

Mach

Losn balance

Beginning loan

80,000

26,500

Add:

additional loan

-53,500

-26300

26,265

Ending Loan balance

26,500

0

26265

KAYAK COMPANY
Cash Budget
For January, February, and March
	January	February	March
Beginning cash balance	$40,000	40000	$67,735
Cash receipts	524,000	406,500	475,000
Total cash available	564,000	446,500	542,735
Cash disbursements	469,700	352,200	529,000
Interest expense
January ($80,000 x 1%)	800
February ($26,500 x 1%)	________	265	________
Preliminary cash balance	93,500	94,035	13,735
Additional loan from bank			26,265
Repayment of loan to bank	-53,500		-26,300
Ending cash balance	$40,000	$67,735	$40,000
Ending loan balance	$26,500	$0	$26,265