Kayak Co. budgeted the following cash receipts (excluding cash receipts from loa

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 JanuaryY Pabruary March Cash Recelpt 523,000 403,500 465, 000 Canh paymenta 463,200 343,700 521,000 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 $140,000 at a monthly interest rate or 1%, paid on the last day of each month. The interest is computed based on the beginning balance of the loán 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 Peibedic ateh budgesfor Januar,February and March. (Negative balances and Loan repayment amounts if any) shoud be Indicated with minus sign.) KAYAK COMPANY Cash Budget For January, February, and March JanuaryF February March Beginning cash balance S 30,00030,000 3 30,000 465,000 195,000 Cash receipts 403,500 Total cash available nterest expense Cash payments Preliminary cash balance Additional loan (loan repayment) Ending cash balance 553,000 (e00) 463,200 433,500 343,700 Loan balance Loan balance -Beginning of month60,000 Additionaf loan (loan repayment) Loan balance-End of month

Explanation / Answer

KAYAK COMPANY Cash Budget For January, February, and March January Febuary March Beginning cash balance 30000 30000 88992 Cash receipt 523000 403500 465000 Total cash available 553000 433500 553992 Interest expenses -600 -8 0 Cash payments -463200 -343700 -521000 Preliminary cash balance 89200 89792 32992 Additional loan (loan repayment) -59200 -800 Ending cash balance 30000 88992 32992 Loan balance Loan balance Beginning of month 60000 800 0 Additional loan (loan repayment) -59200 -800 0 Loan balance End of month 800 0 0 *Interest expenses: January 60000 * 1% 600 February 800 * 1% 8

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