Solution-Prepare monthly cash budgets for January and March

Prepare monthly cash budgets for January and March

Reference no: EM132516850

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 ?rst three months of next year.

	Cash Receipts	Cash Payments
January	$526,000	$475,000
February	409,000	358,000
March	469,000	533,000

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.

Required - Prepare monthly cash budgets for January, February and March.

Reference no: EM132516850

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Prepare monthly cash budgets for January and March

Reference no: EM132516850

Reference no: EM132516850

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