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 ibans 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 i Add Cash receipts Total cash available Less: Cash payments for Interest on loan Prepare monthly cash budgets for January, February, and March Note: Negative balances and Loan repayment amounts (if any) should be indicated with minus sign. Total cash payments Preliminary cash balance Cash payments $475,000 Loan activity Additional loan (loan repayment) Ending cash balance 350,000 $25,000 Loan balance-Beginning of month Additional loan (loan repayment) Loan balance, end of month KAYAK COMPANY Cash Budget $ 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 $ 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 ibans 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 i Add Cash receipts Total cash available Less: Cash payments for Interest on loan Prepare monthly cash budgets for January, February, and March Note: Negative balances and Loan repayment amounts (if any) should be indicated with minus sign. Total cash payments Preliminary cash balance Cash payments $475,000 Loan activity Additional loan (loan repayment) Ending cash balance 350,000 $25,000 Loan balance-Beginning of month Additional loan (loan repayment) Loan balance, end of month KAYAK COMPANY Cash Budget $ January Loan balance $ 30,000 60,000 February March
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 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
$ 525,000
400,000
450,000
$ 475,000
350,000
525,000
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 Ibans 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
Add Cash receipts
Total cash available
Less Cash payments for
Interest on loan
Total cash payments
Preliminary cash balance
Loan activity
Additional loan (loan repayment)
Ending cash balance
Loan balance Beginning of month
Additional loan (loan repayment)
Loan balance, end of month
KAYAK COMPANY
Cash Budget
$
January
Loan balance
$
30,000
60,000
February
March
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