Kayak Company has budgeted the following cash receipts and payments (excluding loans received or repaid and loan interest payments) for the first three months of the next year: Month January February March Cash Receipts ($) 520,000 405,000 477,000 Cash Payments ($) 460,200 345,200 525,000 Additional Information: Minimum cash balance: The company requires a minimum cash balance of $30,000 at the end of each month. • Loan interest: Loans taken to meet the cash requirement are charged 1% interest per month, • paid at month-end. The interest is computed on the beginning loan balance for the month. Excess cash: Any preliminary cash balance above $30,000 is used to repay loans at the end of the month. • Initial balances (as of January 1): • Cash: $30,000 • Loan: $60,000 Task: 1. Prepare the monthly cash budgets for January, February, and March. 2. Indicate negative balances and loan repayment amounts with a minus sign.
Kayak Company has budgeted the following cash receipts and payments (excluding loans received or repaid and loan interest payments) for the first three months of the next year: Month January February March Cash Receipts ($) 520,000 405,000 477,000 Cash Payments ($) 460,200 345,200 525,000 Additional Information: Minimum cash balance: The company requires a minimum cash balance of $30,000 at the end of each month. • Loan interest: Loans taken to meet the cash requirement are charged 1% interest per month, • paid at month-end. The interest is computed on the beginning loan balance for the month. Excess cash: Any preliminary cash balance above $30,000 is used to repay loans at the end of the month. • Initial balances (as of January 1): • Cash: $30,000 • Loan: $60,000 Task: 1. Prepare the monthly cash budgets for January, February, and March. 2. Indicate negative balances and loan repayment amounts with a minus sign.
Chapter6: Managing Cash Flow
Section: Chapter Questions
Problem 1EP
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Transcribed Image Text:Kayak Company has budgeted the following cash receipts and payments (excluding loans received
or repaid and loan interest payments) for the first three months of the next year:
Month
January
February
March
Cash Receipts ($)
520,000
405,000
477,000
Cash Payments ($)
460,200
345,200
525,000
Additional Information:
Minimum cash balance: The company requires a minimum cash balance of $30,000 at the end
of each month.
•
Loan interest: Loans taken to meet the cash requirement are charged 1% interest per month,
•
paid at month-end. The interest is computed on the beginning loan balance for the month.
Excess cash: Any preliminary cash balance above $30,000 is used to repay loans at the end of
the month.
• Initial balances (as of January 1):
• Cash: $30,000
•
Loan: $60,000
Task:
1. Prepare the monthly cash budgets for January, February, and March.
2. Indicate negative balances and loan repayment amounts with a minus sign.
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