Newman Medical Clinic has budgeted the following cash flows.

	January			February			March
Cash receipts	$	120,000		$	116,000		$	136,000
Cash payments
For inventory purchases		110,000			82,000			95,000
For S&A expenses		31,000			32,000			27,000

Newman Medical had a cash balance of $8,000 on January 1. The company desires to maintain a cash cushion of $5,000. Funds are assumed to be borrowed, in increments of $1,000, and repaid on the last day of each month; the interest rate is 1 percent per month. Repayments may be made in any amount available. Newman 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. (Any repayments/shortage should be indicated with a minus sign. Round your answers to the nearest whole dollar amount.)

1. What is the borrowing (replacement) and interest for January, February, and March? Please break down how to find the answer.