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Solomon Medical Clinic has budgeted the following cash flows:

	January			February			March
Cash receipts	$	114,000		$	120,000		$	140,000
Cash payments
For inventory purchases		97,000			79,000			92,000
For S&A expenses		38,000			39,000			34,000

Solomon Medical had a cash balance of $15,000 on January 1. The company desires to maintain a cash cushion of $7,000. Funds are assumed to be borrowed, in increments of $1,000, and repaid on the last day of each month; the interest rate is 3 percent per month. Repayments may be made in any amount available. Solomon pays its vendors on the last day of the month also. The company had a monthly $40,000 beginning balance in its line of credit liability account from this years quarterly results.

Required

Prepare a cash budget. (Round intermediate and final answers to the nearest whole dollar amounts. Any repayments/shortage should be indicated with a minus sign. )

Cash Budget January February March Beginning cash balance $15,000 $(7,200) $(5,200) Add: Cash receipts 114,000 120,000 140,000 Cash available 129,000 112,800 134,800 Less: Cash payments For inventory purchases 97,000 79,000 92,000 For S&A expenses 38,000 39,000 34,000 Interest expense per month 1,200 Total budgeted payments 136,200 118,000 126,000 Payments minus receipts Surplus (shortage) (7,200) (5,200) 8,800 Financing Activity Borrowing (repayment) 0 Ending cash balance $(7,200) $(5,200) $8,800

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