FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
Bartleby Related Questions Icon

Related questions

Question

Give me step by step solution and explanation

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.
Cash Receipts Cash payments
January
February
March
$ 521,000
401,500
470,000
$ 461,200
341,700
529,000
Kayak requires a minimum cash balance of $50,000 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 $50,000 is used to repay loans at month-end. The company has a cash balance of $50,000 and a loan balance of
$100,000 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.
Answer is complete but not entirely correct.
KAYAK COMPANY
Cash Budget
January
February
March
Beginning cash balance
Add: Cash receipts
$
50,000
$
50,000 $
10,992
521,000
401,500
470,000
Total cash available
571,000
451,500
480,992
Less: Cash payments for
Interest on loan
(1,000)
(1,000)
0
All items excluding interest
461,200
341,700
(529,000)
Total cash payments
460,200
340,700
(529,000)
Preliminary cash balance
109,800
110,192
48,008
Loan activity
Additional loan (loan repayment)
59,800 ×
(39,200)
1,992x
Ending cash balance
$ 50,000 $
67,600 $
50,000
Loan balance
Loan balance - Beginning of month
Additional loan (loan repayment)
Loan balance, end of month
$ 100,000 $
40,200
$
0
$
59,800
40,200 $
(39,200)
1,992
0
$
1,992
expand button
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. Cash Receipts Cash payments January February March $ 521,000 401,500 470,000 $ 461,200 341,700 529,000 Kayak requires a minimum cash balance of $50,000 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 $50,000 is used to repay loans at month-end. The company has a cash balance of $50,000 and a loan balance of $100,000 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. Answer is complete but not entirely correct. KAYAK COMPANY Cash Budget January February March Beginning cash balance Add: Cash receipts $ 50,000 $ 50,000 $ 10,992 521,000 401,500 470,000 Total cash available 571,000 451,500 480,992 Less: Cash payments for Interest on loan (1,000) (1,000) 0 All items excluding interest 461,200 341,700 (529,000) Total cash payments 460,200 340,700 (529,000) Preliminary cash balance 109,800 110,192 48,008 Loan activity Additional loan (loan repayment) 59,800 × (39,200) 1,992x Ending cash balance $ 50,000 $ 67,600 $ 50,000 Loan balance Loan balance - Beginning of month Additional loan (loan repayment) Loan balance, end of month $ 100,000 $ 40,200 $ 0 $ 59,800 40,200 $ (39,200) 1,992 0 $ 1,992
Expert Solution
Check Mark
Knowledge Booster
Background pattern image
Recommended textbooks for you
Text book image
FINANCIAL ACCOUNTING
Accounting
ISBN:9781259964947
Author:Libby
Publisher:MCG
Text book image
Accounting
Accounting
ISBN:9781337272094
Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:Cengage Learning,
Text book image
Accounting Information Systems
Accounting
ISBN:9781337619202
Author:Hall, James A.
Publisher:Cengage Learning,
Text book image
Horngren's Cost Accounting: A Managerial Emphasis...
Accounting
ISBN:9780134475585
Author:Srikant M. Datar, Madhav V. Rajan
Publisher:PEARSON
Text book image
Intermediate Accounting
Accounting
ISBN:9781259722660
Author:J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:McGraw-Hill Education
Text book image
Financial and Managerial Accounting
Accounting
ISBN:9781259726705
Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:McGraw-Hill Education