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.

	Cash Receipts			Cash payments
January	$	524,000		$	469,700
February		406,500			352,200
March		475,000			529,000

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 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 March. (Negative balances and Loan repayment amounts (if any) should be indicated with minus sign.)

Answer is not complete.

	KAYAK COMPANY Cash Budget For January, February, and March January February March Beginning cash balance $40,000 $40,000selected answer correct $40,000selected answer incorrect Cash receiptsselected answer correct 524,000selected answer correct 406,500selected answer correct not attempted Total cash available 564,000 446,500 Cash paymentsselected answer correct 469,700selected answer correct 352,200selected answer correct not attempted Interest expenseselected answer correct 800selected answer correct 265selected answer correct not attempted Preliminary cash balance 93,500selected answer correct 94,035selected answer correct not attempted Additional loan (loan repayment)selected answer correct (53,500)selected answer correct not attempted not attempted Ending cash balance $40,000selected answer correct not attempted $40,000selected answer correct Loan balance Loan balance - Beginning of month $80,000 $26,500 $0 Additional loan (loan repayment) (53,500) Loan balance - End of month $26,500selected answer correct not attempted not attempted

Answer 1

Answer:

KAYAK COMPANY
Cash Budget
For January, February, and March
	January	February		March
Beginning cash balance	$40,000	40000		$67,735
Cash receipts	524,000	406,500		475,000
Total cash available	564,000	446,500		542,735
Cash disbursements	469,700	352,200		529,000
Interest expense
January ($80,000 x 1%)	800
February ($26,500 x 1%)	________	265		________
Preliminary cash balance	93,500	94,035		13,735
Additional loan from bank				26,265
Repayment of loan to bank	-53,500		-26,300
Ending cash balance	$40,000	$67,735		$40,000
Ending loan balance	$26,500	$0		$26,265

	Jan	Feb	Mach
Losn balance
Beginning loan	80,000	26,500
Add:
additional loan	-53,500	-26300	26,265
Ending Loan balance	26,500	0	26265