Survey of Accounting (Accounting I)
Survey of Accounting (Accounting I)
8th Edition
ISBN: 9781305961883
Author: Carl Warren
Publisher: Cengage Learning
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Exercise 7-17 (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
$ 526,000
$ 473,900
411,500
465,000
359,400
523,000
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.
Note: Negative balances and Loan repayment amounts (if any) should be indicated with minus sign.
Beginning cash balance
Total cash available
All items excluding interest
Interest on loan
Total cash payments
KAYAK COMPANY
Cash Budget
January
40,000 $
526,000
566,000
10,000
10,000
February
40,000 $
411,500
451,500
March
40,000
465,000
505,000
0
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Transcribed Image Text:Exercise 7-17 (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 $ 526,000 $ 473,900 411,500 465,000 359,400 523,000 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. Note: Negative balances and Loan repayment amounts (if any) should be indicated with minus sign. Beginning cash balance Total cash available All items excluding interest Interest on loan Total cash payments KAYAK COMPANY Cash Budget January 40,000 $ 526,000 566,000 10,000 10,000 February 40,000 $ 411,500 451,500 March 40,000 465,000 505,000 0
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