Kayak Co. budgeted the following cash receipts (excluding cash receipts from loa

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. January February March Cash Receipts $524,000 410,000 476,000 Cash Disbursements $487,000 360,000 527,000 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 $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 January1 Prepare monthly cash budgets for each of the first three months of next year. (Be certain to enter"O" wherever required. Negative balance and Loan repayment amount should be indicated with minus sign

Explanation / Answer

KAYAK com,MARCHpany cash budget for JA,FEB,MARCH Particulars JAN FEB MARCH Beggining cash balance 40000 40000 45762 cash receipts 524000 410000 476000 Loan receipt from bank 45238 Total cash receivables 564000 450000 567000 Cash disbursment -487000 -360000 -527000 Interest payment -800 -438 0 preliminery cash balance 76200 89562 40000 Loan repayment -36200 -43800 0 Ending balance 40000 45762 40000 LOAN BALANCE Loan balance beggining of the month 80000 43800 0 Additional loan(Loan repayment) -36200 -43800 0 Loan receipt from bank 0 0 45238 Loan balance- End of the month 43800 0 45238

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