Reference no: EM132736136

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
                 Receipts               payments

January     $522,000           $467,700

February   412,000             357,700

March      475,000              531,000

According to a credit agreement with its bank, Kayak requires 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 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.

PROBLEM 1: How you make a monthly cash budgets for January, February, and March? (Negative balances and Loan repayment amounts (if any) should be indicated with minus sign.)