Kayak Co. budgeted the following cash receipts (excluding cash receipts from loa
ID: 2463433 • Letter: K
Question
Kayak Co. budgeted the following cash receipts (excluding cash receipts from loans received) and cash disbursements (excluding cash disbursements 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 $40,000 at each month-end. In return, the bank has agreed that the company can borrow up to $150,000 at an annual interest rate of 12%, 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 available cash 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 each of the first three months of next year.
Cash Receipts Cash Disbursements January $521,000 $461,200 February $521,000 350,200 March 479,000 527,000Explanation / Answer
Date Particulars Amount 1 Jan Opening Balance 40000 Add: Cash receipts 521000 Less: Cash Disbursements 461200 Less: Interest payment (80000*12%/12) 800 Less: Repayment of loan (b/f) 59000 Closing Balance 40000 1 feb opening Balance 40000 Add: Cash receipts 521000 Less: Cash Disbursement 350200 Less: Interest payment (80000-59000)*12%/12) 210 Less: loan repayment (80000-59000) 21000 Closing balance (b/f) 189590 1 march Opening Balance 189590 Add: Cash receipts 479000 Less: cash disbursement 527000 Closing balance (b/f) 141590
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.