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 $ 527,000 $ 467,200 February 405,000 345,200 March 454,000 530,000 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.) Beginning cash balance Add: Cash receipts Total cash available Less: Cash payments for All items excluding interest Interest on loan Total cash payments Preliminary cash balance Answer is complete but not entirely correct. KAYAK COMPANY Cash Budget Loan activity Additional loan (loan repayment) Ending cash balance Loan balance - Beginning of month Additional loan (loan repayment) Loan balance, end of month ✔ ✔ ✔ ✔ • January $ 40,000 527,000 567,000 (467,200) 4,672 (462,528) 95,128 February $ 40,000 $ 405,000 445,000 (55,128) $ 40,000 $ Loan balance (345,200) 3,452 (341,748) 96,348 (56,348) ► 40,000 $ March 40,000 454,000 494,000 (530,000) 5.300 (524,700) (36,000) (32,000) 4,000 S 80,000 S 24,872 0 (55,128) (56,348) (32,000) $ 24,872S (31,476) $ (32,000) S
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 $ 527,000 $ 467,200 February 405,000 345,200 March 454,000 530,000 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.) Beginning cash balance Add: Cash receipts Total cash available Less: Cash payments for All items excluding interest Interest on loan Total cash payments Preliminary cash balance Answer is complete but not entirely correct. KAYAK COMPANY Cash Budget Loan activity Additional loan (loan repayment) Ending cash balance Loan balance - Beginning of month Additional loan (loan repayment) Loan balance, end of month ✔ ✔ ✔ ✔ • January $ 40,000 527,000 567,000 (467,200) 4,672 (462,528) 95,128 February $ 40,000 $ 405,000 445,000 (55,128) $ 40,000 $ Loan balance (345,200) 3,452 (341,748) 96,348 (56,348) ► 40,000 $ March 40,000 454,000 494,000 (530,000) 5.300 (524,700) (36,000) (32,000) 4,000 S 80,000 S 24,872 0 (55,128) (56,348) (32,000) $ 24,872S (31,476) $ (32,000) S
Chapter6: Managing Cash Flow
Section: Chapter Questions
Problem 1EP
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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.
Cash Receipts Cash payments
$ 527,000
$ 467,200
345,200
530,000
January
February 405,000
March 454,000
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.)
Beginning cash balance
Add: Cash receipts
Total cash available
Less: Cash payments for
All items excluding interest
Interest on loan
Total cash payments
Preliminary cash balance
> Answer is complete but not entirely correct.
KAYAK COMPANY
Cash Budget
Loan activity
Additional loan (loan repayment)
Ending cash balance
Loan balance - Beginning of month
Additional loan (loan repayment)
Loan balance, end of month
✔
✓
✓
✔
✓
$
February
40,000 $ 40,000
527,000✔
567,000
$
January
(467,200) ✔
4,672 X
(462,528)
95,128 X
(55,128) X
$
Loan balance
$
40,000 $
80,000 S
(55,128)
24,872 S
40,000 $
405,000✔
445,000
(345,200) ✔
3,452 X
(341,748)
96,348 X
(56,348) X
40,000 $
24,872
(56,348)
$ (31,476)
S
$
March
40,000 X
454,000✔
494,000
(530,000)
5,300 X
(524,700)
(36,000)
(32,000) X
4,000 X
0
(32,000)
(32,000) X
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