Kayak Co. budgeted the following cash receipts (excluding cash receipts from loa
ID: 2395873 • Letter: K
Question
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.
According to a credit agreement with the company’s bank, Kayak promises to have 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
Receipts Cash
payments January $ 518,000 $ 462,600 February 409,500 354,100 March 475,000 529,000
Explanation / Answer
Prepare monthly cash budgets for January, February, and March
January February March Beginning balance 30000 30000 85348 Cash receipts 518000 409500 475000 Total cash available 548000 439500 560348 Less: Cash payment -462600 -354100 -529000 Less: Interest -600 -52 0 Total cash disbursement -463200 -354152 -529000 Preliminary cash balance 84800 85348 31348 Loan taken (repaid) -54800 0 0 Ending balance 30000 85348 31348Related Questions
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