Kitty has good time on the day (4)
I believe the answer is:
fund
'kitty' is the definition.
(fund or money for a particular purpose)
'good time on the day' is the wordplay.
'good time' becomes 'fun' (I've seen this in another clue).
'on' means one lot of letters go next to another (in a down clue, letters appear on others).
'the day' becomes 'd' (abbreviation for day).
'fun'+'d'='FUND'
'has' acts as a link.
(Other definitions for fund that I've seen before include "Capitalize" , "Pay for; kitty" , "Reserve of money for future use" , "Sum of money set aside for a purpose" , "Pool of money" .)