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Kayak Co. budgeted the following cash receipts (excluding cash receipts from loans received) and cash payments...

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Accounting

Kayak Co. budgeted the following cash receipts (excluding cashreceipts from loans received) and cash payments (excluding cashpayments for loan principal and interest payments) for the firstthree months of next year. Cash Receipts Cash payments January $526,000 $ 471,700 February 406,500 352,200 March 464,000 533,000According to a credit agreement with the company’s bank, Kayakpromises to have a minimum cash balance of $40,000 at eachmonth-end. In return, the bank has agreed that the company canborrow up to $160,000 at a monthly interest rate of 1%, paid on thelast day of each month. The interest is computed based on thebeginning balance of the loan for the month. The company repaysloan principal with any cash in excess of $40,000 on the last dayof each month. The company has a cash balance of $40,000 and a loanbalance of $80,000 at January 1. Prepare monthly cash budgets forJanuary, February, and March. (Negative balances and Loan repaymentamounts (if any) should be indicated with minus sign.)

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Kayak Co
Cash Budget
January February March
Beginning cash balance $                                           40,000 $                        40,000 $                                       67,535
Add: Total Cash Receipts $                                         526,000 $                      406,500 $                                     464,000
Total Cash Available $                                         566,000 $                      446,500 $                                     531,535
Less:Total Cash Payments $                                         471,700 $                      352,200 $                                     533,000
Less: Interest expenses $80,000*1% = $800 $26,500*1% = $265
Preliminary cash balance $                                           93,500 $                        94,035 $                                       (1,465)
Additional loan (loan repayment) $93,500-$40,000 = ($53,500) $                      (26,500) $40,000 - $1,465 = $41,465
Ending cash balance $                                           40,000 $                        67,535 $                                       40,000
Loan Balance
Loan balance - Beginning of the month $                                           80,000 $                        26,500
Additional loan (Loan repayment) $                                         (53,500) $                      (26,500) $                                       41,465
Loan balance - End of month $                                           26,500 $                                    - $                                       41,465

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