Exercise 20-17 (Algo) Preparation of cash budgets (for three periods) LO P2 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 $ 470,900 353,900 536,000 $ 523,000 406,000 467,000 Kayak requires a minimum cash balance of $40,000 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 $40,000 is used to repay loans at month-end. The company has a cash balance of $40,000 and a loan balance of $80,000 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.)

Prepare Cash Budget For 3 Months Brewster Corporation expects the following cash receipts and disbursements during the first quarter of the year (receipts exclude new borrowings and disbursements exclude interest payments on borrowings since January 1) January February March $280,000 $300,000 $270,000 Cash receipts Cash disbursements 260,000 340,000 280,000 The expected cash balance at January 1, is $62,000. Brewster wants to maintain a cash balance at the end of each month of at least $60,000. Short-term borrowings at 1% interest per month will be used to accomplish this, if necessary. Borrowings (in multiples of $1,000) will be made at the beginning of the month in which they are needed, with interest for that month paid at the end of the month. Prepare a cash budget for the quarter ended March 31. Brewster Corporation Cash Budget for the Quarter Ended March 31 January Beginning cash balance Cash receipts Short-term borrowings Cash available Cash disbursements Interest payment Total…

A-2

8-19

Schedule of cash payments for a service company EastGate Physical Therapy Inc. is planning its cash payments for operations for the first quarter (January-March). The Accrued Expenses Payable balance on January 1 is $26,200. The budgeted expenses for the next three months are as follows: January February March Salaries $60,300 $73,400 $81,200 Utilities 5,000 5,500 6,600 Other operating expenses 46,400 50,600 $5,700 Total $111,700 $129,500 $143,500 Other operating expenses include $3,300 of monthly depreciation expense and $800 of monthly insurance expense that was prepaid for the year on May 1 of the previous year of the remaining expenses, 80% are paid in the month in which they are incurred, with the remainder paid in the following month. The Accrued Expenses Payable balance on January 1 relates to the expenses incurred in December. Prepare a schedule of cash payments for operations for January, February, and March. EastGate Physical Therapy Inc. Schedule of Cash Payments for…