Kayak Co. budgeted the following cash receipts (excluding cash receipts from loa
ID: 2337564 • 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.)
Receipts Cash
payments January $ 522,000 $ 471,000 February 405,000 354,000 March 451,000 533,000
Explanation / Answer
January February March Beginning cash balance 30000 30000 71304 Cash receipts 522000 405000 451000 Total cash available 552000 435000 522304 Cash disbursements 471000 354000 533000 Interest expense 600 96 0 Preliminary cash balance 80400 80904 -10696 Additional loan (loan repayment) -50400 -9600 40696 Ending cash balance 30000 71304 30000 Loan balance Loan balance Beginning of month 60000 9600 0 Additional loan (loan repayment) -50400 -9600 40696 Loan balance End of month 9600 0 40696
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.