AssumeDaisy Consulting beganJanuary with$17,000 cash. Management forecasts that cash receipts from credit customers will be$53,000inJanuary and$57,000 inFebruary. Projected cash payments include equipment purchases ($24,000inJanuary and$42,000 inFebruary) and selling and administrative expenses ($2,000 eachmonth).Daisy's bank requires a $32,000 minimum balance in the firm's checking account. At the end of any month when the account balance falls below$32,000, the bank automatically extends credit to the firm in multiples of$5,000.Daisy borrows as little as possible and pays back loans each month in$1,000 increments, plus10% interest on the entire unpaid principal. The first payment occurs one month after the loan.

Requirements

1.PrepareDaisy Consulting's cash budget forJanuary andFebruary2018.

2.How much cash willDaisy borrow inFebruary if cash receipts from customers that month total$52,000 instead of$57,000?