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 Cash Receipts $528, 000 409, 000 452,000 payments $470,400 January February 351,400 534, 000 March According to a credit agreement with its bank, Kayak requires 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 March. (Negative balances and Loan repayment amounts (if any) should be indicated with minus sign.) Answer is complete but not entirely correct. KAYAK COMPANY Cash Budget For January, February, and March January February March Beginning cash balance Cash receipts Total cash available Cash payments Interest expense Preliminary cash balance Additional loan (loan repayment) Ending cash balance 40,000 $ 40,000 74,168 528,000 409,000 452,000 568,000 449,000 526, 168 (470,400) (351,400) ( (534,000) (800) O (232) 96,800 97,368 (7,832) (56,800) (23,200) 1,032 8 40,000 74,168 40,000 Loan balance li nan halance- Reninninn of month Is Rn n0n 23 200
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 Cash Receipts $528, 000 409, 000 452,000 payments $470,400 January February 351,400 534, 000 March According to a credit agreement with its bank, Kayak requires 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 March. (Negative balances and Loan repayment amounts (if any) should be indicated with minus sign.) Answer is complete but not entirely correct. KAYAK COMPANY Cash Budget For January, February, and March January February March Beginning cash balance Cash receipts Total cash available Cash payments Interest expense Preliminary cash balance Additional loan (loan repayment) Ending cash balance 40,000 $ 40,000 74,168 528,000 409,000 452,000 568,000 449,000 526, 168 (470,400) (351,400) ( (534,000) (800) O (232) 96,800 97,368 (7,832) (56,800) (23,200) 1,032 8 40,000 74,168 40,000 Loan balance li nan halance- Reninninn of month Is Rn n0n 23 200
Chapter6: Managing Cash Flow
Section: Chapter Questions
Problem 1EP
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Transcribed Image Text: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
Cash
Receipts
$528,000
payments
$470,400
351,400
534,000
January
February
409,000
March
452,000
According to a credit agreement with its bank, Kayak requires 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 March. (Negative balances and Loan repayment amounts (if any) should
be indicated with minus sign.)
8 Answer is complete but not entirely correct.
KAYAK COMPANY
Cash Budget
For January, February, and March
January
February
March
Beginning cash balance
40,000
40,000 O $
74,168 O
Cash receipts
528,000
409,000 O
452,000 O
Total cash available
568,000
449,000
526,168
Cash payments
(470,400)
(351,400) O
(534,000) O
Interest expense
(800) O
(232) O
Preliminary cash balance
Additional loan (loan repayment)
96,800
97,368 O
(7,832) O
(56,800) O
(23,200) O
1,032 X
Ending cash balance
40,000
24
74,168 O$
40,000 O
Loạn balance
lLoan halance - Reginning of month
80 000
23 200
Is
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