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. January February March Cash Receipts $526,000 408,000 464,000 Cash payments. $471,700 353,700 520,000 According to a credit agreement with the company's bank, Kayak promises to have a minimum cash balance of $30,000 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 balance of the loan for the month. The company repays loan principal with any cash in excess of $30,000 on the last day of each month. The company has a cash balance of $30,000 and a loan balance of $60,000 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.)
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. January February March Cash Receipts $526,000 408,000 464,000 Cash payments. $471,700 353,700 520,000 According to a credit agreement with the company's bank, Kayak promises to have a minimum cash balance of $30,000 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 balance of the loan for the month. The company repays loan principal with any cash in excess of $30,000 on the last day of each month. The company has a cash balance of $30,000 and a loan balance of $60,000 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.)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
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Transcribed Image Text: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.
January
February
March
Cash
Receipts
$526,000
408,000
464,000
Cash
payments
$471,700
353,700
520,000
According to a credit agreement with the company's bank, Kayak promises to have a minimum cash balance of $30,000 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 balance of the loan for the month. The company repays loan
principal with any cash in excess of $30,000 on the last day of each month. The company has a cash balance of $30,000 and a loan
balance of $60,000 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.)
KAYAK COMPANY
Cash Budget
For January, February, and March
January
Beginning cash balance.
Cash receipts
Total cash available
Cash payments
Interest expense
Preliminary cash balance
Additional loan (loan repayment)
Ending cash balance
Loan balance - Beginning of month
Additional loan (loan repayment)
Loan balance - End of month
$
30,000 $
526,000
556,000
471,700
Loan balance
$
60,000
February
30,000
408,000
438,000
353,700
$
March
464,000
520,000;
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