geted the following cash receipts (excluding cash receipts from loans received)

Question

geted 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 payments $465,80 354,300 535,000 Recei January February March $519,000 407,500 451,000 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 March. (Negative balances and Loan repayment amounts (if any) should be indicated with minus sign.) KAYAK COMPANY Cash Budget For January, February, and March February March Beginning cash balance S 40,000 Total cash available Preliminary cash balance Ending cash balance Loan balance Loan balance- Beginning of month80,000 Additional loan (loan repayment) Loan balance End of month

Explanation / Answer

Prepare monthly cash budget :

January February March Beginning cash balance 40000 40000 65324 Cash receipts 519000 407500 451000 Total cash available 559000 447500 516324 Cash payment -465800 -354300 -535000 Interest expense -800 -276 0 Preliminary cash balance 92400 92924 -18676 Borrowing (repayment) -52400 -27600 58676 Ending cash balance 40000 65324 40000 Loan Balance Loan balance-Beginning of month 80000 27600 0 Additional loan (loan repayment) -52400 -27600 58676 Loan balance-end of month 27600 0 58676

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