Check my wor Exercise 7-17 Preparation of cash budgets (for three periods) LO P2
ID: 2560510 • Letter: C
Question
Check my wor Exercise 7-17 Preparation of cash budgets (for three periods) LO P2 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 January February March Receiptspayments 524,000 $471,900 349,900 475,000 535,000 402,000 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 alance 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.)Explanation / Answer
Kayak company Cash budget Jan Feb March Beginning cash balance 40,000 40,000 63,113 cash receipt 524,000 402,000 475,000 total cash available 564,000 442000 538113 cash disbursements -471,900 -349,900 -535,000 interest expense -800 -287 0 preliminary cash balance 91,300 91813 3113 addittional loan (loan repayment) -51,300 -28700 36,887 ending cash balance 40,000 63113 40,000 loan balance loan balance-beginning of the month 80,000 28,700 0 addittional loan(loan repayment) -51300 -28700 36,887 loan balance -end of month 28,700 0 36,887 interest expense (jan 1) 80,000*1%=800 interest expense (feb) ) 28700*1%=287