90.2K

Verified Solution

Link Copied!

Kayak Co. budgeted the following cash receipts (excluding cash receipts from loans received) and cash disbursements (excluding cash disbursements for loan principal and interest payments) for the first three months of next year.

Cash Receipts		Cash Disbursements
January	$	518,000	$	481,000
February		410,000		351,000
March		480,000		535,000

According to a credit agreement with the companys 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 $160,000 at an annual interest rate of 12%, 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 available cash 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 each of the first three months of next year. (Be certain to enter "0" wherever required. Negative balance and Loan repayment amount should be indicated with minus sign.) KAYAK COMPANY Cash Budget For January, February, and March January February March Beginning cash balance $40,000 Total cash available Preliminary cash balance Ending cash balance Loan balance Loan balance - Beginning of month $80,000 Additional loan (loan repayment) Loan balance - End of month

Answer & Explanation Solved by verified expert

See Answer