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. Cash Receipts Cash Disbursements January $ 521,000 $ 487,000 February 400,500 365,000 March 476,000 522,000 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 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.

Explanation / Answer

Cash Budget January February March Beginning Cash Balance 40000 40000 40000 Cash Receipt 521000 400500 476000 Loan Taken 0 0 Total Available Cash 561000 440500 516000 Cash Disbursements 487000 365000 522000 Interest Expenses 800 468 117.68 Loan Payment 33200 35032 Ending Cash Balance 40000 40000 40000 Loan Balance Beginning 80000 46800 11768 Additional Loan(Loan Payment) -33200 -35032 46117.68 Ending Loan 46800 11768 57885.68

Related Questions

Navigate

• Browse (All)
• Browse K
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.