Kayak Co. budgeted the following cash receipts (excluding cash receipts from loa
ID: 2605358 • 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.
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
Cash
Receipts
Cash
payments
January
$
524,000
$
469,700
February
406,500
352,200
March
475,000
529,000
Explanation / Answer
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
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
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