Kayak Company 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 Cash payments $ 520,000 Kayak requires a minimum cash balance of $30,000 at each month-end. Loans taken to meet this requirement charge 1%, interest per month, paid at each month-end. The interest is computed based on the beginning balance of the loan for the month. Any preliminary cash balance above $30,000 is used to repay loans at month-end. The company has a cash balance of $30,000 and a loan balance of $60,000 at January 1. Beginning cash balance Total cash available Prepare monthly cash budgets for January, February, and March. Note: Negative balances and Loan repayment amounts (if any) should be indicated with minus sign. 410,500 479,000 Total cash payments Preliminary cash balance Loan activity Ending cash balance $ 464,600 355,100 524,000 Loan balance-Beginning of month Additional loan (loan repayment) KAYAK COMPANY Cash Budget S January Loan balance $ 30,000 60,000 February March

Kayak Company 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 Cash payments $ 520,000 Kayak requires a minimum cash balance of $30,000 at each month-end. Loans taken to meet this requirement charge 1%, interest per month, paid at each month-end. The interest is computed based on the beginning balance of the loan for the month. Any preliminary cash balance above $30,000 is used to repay loans at month-end. The company has a cash balance of $30,000 and a loan balance of $60,000 at January 1. Beginning cash balance Total cash available Prepare monthly cash budgets for January, February, and March. Note: Negative balances and Loan repayment amounts (if any) should be indicated with minus sign. 410,500 479,000 Total cash payments Preliminary cash balance Loan activity Ending cash balance $ 464,600 355,100 524,000 Loan balance-Beginning of month Additional loan (loan repayment) KAYAK COMPANY Cash Budget S January Loan balance $ 30,000 60,000 February March

Entrepreneurial Finance

6th Edition

ISBN:9781337635653

Author:Leach

Publisher:Leach

Chapter6: Managing Cash Flow

Section: Chapter Questions

Problem 1EP

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Concept explainers

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.

Question

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Kayak Company 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 Cash payments
$ 520,000
410,500
479,000
Kayak requires a minimum cash balance of $30,000 at each month-end. Loans taken to meet this requirement charge 1%, interest per
month, paid at each month-end. The interest is computed based on the beginning balance of the loan for the month. Any preliminary
cash balance above $30,000 is used to repay loans at month-end. 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.
Note: Negative balances and Loan repayment amounts (if any) should be indicated with minus sign.
Beginning cash balance
Total cash available
Total cash payments
Preliminary cash balance i
Loan activity
Ending cash balance
$ 464,600
355,100
524,000
Loan balance-Beginning of month
Additional loan (loan repayment)
Loan balance, end of month
KAYAK COMPANY
Cash Budget
$
January
Loan baland
$
30,000
60,000
February
March

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Kayak Company 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 $ 525,000 400,000 450,000 Kayak requires a minimum cash balance of $30,000 at each month-end. Loans taken to meet this requirement charge 1% interest per month, paid at each month-end. The interest is computed based on the beginning balance of the loan for the month. Any preliminary cash balance above $30,000 is used to repay loans at month-end. 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.) Beginning cash balance Add: Cash receipts Total cash available Less: Cash payments for Interest on loan All items excluding interest Total cash…
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