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 $ 517,000 $ 459,400 February 405,000 347,400 March 455,000 533,000 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 $160,000 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.

Answer 1

	Jan	Feb	Mar
Opening balance	$            40,000	$            40,000	$            74,168
Cash receipts	$          517,000	$          405,000	$          455,000
Cash disbursements	$       (459,400)	$       (347,400)	$       (533,000)
Cash balance	$            97,600	$            97,600	$            (3,832)
Interest-1% on opening loan balance	$                (800)	$                (232)	$                     -
Loan issued			$            43,832
Loan payment	$          (56,800)	$          (23,200)
Ending cash balance	$            40,000	$            74,168	$            40,000
	Jan	Feb	Mar
Loan opening balance	$            80,000	$            23,200	$                     -
Loan issued			$            43,832
Loan paid	$          (56,800)	$          (23,200)
Loan closing balance	$            23,200	$                     -	$            43,832