Kayak Co. budgeted the following cash receipts (excluding cash receipts from loa
ID: 2560835 • 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. (Negative balances and Loan repayment amounts (if any) should be indicated with minus sign.)
Answer is not complete.
CashReceipts Cash
payments January $ 521,000 $ 466,700 February 408,500 354,200 March 461,000 526,000
Explanation / Answer
Feb March Beginning cash balance 30000 77937 cash receipts 408500 461000 Total cash available 438500 538937 cash payment (354200) (526000) interest expense (63) 0 preliminary cash balance 84237 12937 additional loan (loan payment) (6300) 17063 [30000-12937] ending cash balance 77937 30000 Loan balance -beginning 6300 0 additional loan (repayment) (6300) 17063 loan balance -end 0 17063
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