Thornton Medical Clinic has budgeted the following cashflows:
| January | February | March |
| Cash receipts | $ | 116,000 | | $ | 122,000 | | $ | 142,000 | |
| Cash payments | | | | | | | | | |
| For inventory purchases | | 98,000 | | | 80,000 | | | 93,000 | |
| For S&A expenses | | 39,000 | | | 40,000 | | | 35,000 | |
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Thornton Medical had a cash balance of $16,000 on January 1. Thecompany desires to maintain a cash cushion of $9,000. Funds areassumed to be borrowed, in increments of $1,000, and repaid on thelast day of each month; the interest rate is 2 percent per month.Repayments may be made in any amount available. Thornton pays itsvendors on the last day of the month also. The company had amonthly $40,000 beginning balance in its line of credit liabilityaccount from this year’s quarterly results.
Required
Prepare a cash budget. (Round intermediate and finalanswers to the nearest whole dollar amounts. Anyrepayments/shortage should be indicated with a minus sign.)
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| | Cash Budget | January | February | March | | Beginning cash balance | $16,000 | $(5,000) | $(3,000) | | Add: Cash receipts | 116,000 | 122,000 | 142,000 | | Cash available | 132,000 | 117,000 | 139,000 | | Less: Cash payments | | | | | For inventory purchases | 98,000 | 80,000 | 93,000 | | For S&A expenses | 39,000 | 40,000 | 35,000 | | | | | | | | | | Total budgeted payments | 137,000 | 120,000 | 128,000 | | Payments minus receipts | | | | | (5,000) | (3,000) | 11,000 | | Financing Activity | | | | | Borrowing (repayment) | | | | | Ending cash balance | $(5,000) | $(3,000) | $11,000 |
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