CAS -Central Authen 5 Help Save & Kayak Co. budgeted the following cash receipts

Question

CAS -Central Authen 5 Help Save & 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 Cash Receipts $521,000 408,000 $462,300 349,300 523,000 February 471,000 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 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 $40,000 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 January. February. and be indicated with minus sign.) March. (Negative bolances and Loan repayment amounts or any) should For January, February, and March 40,000s

Explanation / Answer

KAYAK COMPANY Cash Budget For January, Frbruary and March January February March A Beginning cash balance $40,000 $40,000 $76,379 B Cash receipt $521,000 $408,000 $471,000 C=A+B Total cash available $561,000 $448,000 $547,379 D Cash payment $462,300 $349,300 $523,000 E=0.01*J Interest expense $800 $221 $0 F=D+E Total cash payment $463,100 $349,521 $523,000 G=C-F Preliminary cash balance $97,900 $98,479 $24,379 H=I-G Additional loan(Loan repayment) ($57,900) ($22,100) $15,621 (Maximum Additional loan repayment=Beginning loan balance) I=G+H Ending cash balance $40,000 $76,379 $40,000 LOAN BALANCE J Loan balance beginning of month $80,000 $22,100 $0 K=H Additional loan(Loan repayment) ($57,900) ($22,100) $15,621 L=J+K Loan balance end of month $22,100 $0 $15,621 Preliminary cash balance in March=(Total cash available)-(Total cash payment)=(547379-523000)=$24379

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