Mr. Puffin is currently developing its cash budget for the first three months of operation as well as an investment in machinery in the 3^rd month. Mr. Puffin needs assistance determining its financing needs. Specifically, he wants to know how much to borrow or repay, including interest, each month.

The first months beginning balance is $22,000. Each month requires a minimum balance of $20,000. The cash collections from revenues for months 1, 2, and 3 are $50,000, $90,000, and $70,000, respectively. The operating cost outflows for months 1, 2, and 3 are $60,000, $80,000, and $50,000, respectively. The third month also includes a $100,000 outflow for an investment in new machinery. Mr. Puffin has access to an $80,000 line of credit, with 10% annual interest rate. For budgeting purposes, borrowings occur on the 1^st day of the month and repayments occur as soon as possible with payment on the last day of the month. Round interest calculations to nearest whole number.

At the end of the month, Mr. Puffin produced his variance report. Below are the following results:

-Labor efficiency variance = $5,000 U

-Labor rate variance = $7,500 F

-Material quantity variance = $8,000 F

-Material price variance = $10,000 U

Question:

Create the Financing Section of the Cash Budget for Months 1, 2 and 3. Determine if the line of credit is sufficient and why.