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E23-2 Kasik Co

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E23-2 Kasik Co. budgeted the following cash receipts and cash disbursements for the first three months of next year.


Cash Receipts Cash Disbursements
January  $500,000 $450,000
February  300,000 250,000
March  400,000 500,000

According to a credit agreement with the company’s bank, Kasik 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 next year.

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