Kayak Co. budgeted the following cash receipts ( excluding cash receipts from loans received) and cash disbursements ( excluding cash disbursements for loan and interest payments) for the first three months of next year.
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According to a credit agreement with the company's bank, Kayak promises to have a minimum cash balance of $ 30,000 at each month end. In return, the bank has agreed that the company can borrow up to $ 150,000 at an annual interest rate of 12%, paid on the last day of each month. The interest is computed based on the beginning balance of the loan for the month. The company has a cash balance of $ 30,000 and a loan balance of $ 60,000 at January 1. Prepare monthly cash budgets for each of the first three months of nextyear.