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Perez Medical Clinic has budgeted the following cash flows: January February March Cash receipts $ 111,000 $ 117,000 $ 137,000 Cash payments For inventory purchases

Perez Medical Clinic has budgeted the following cash flows:

January February March
Cash receipts $ 111,000 $ 117,000 $ 137,000
Cash payments
For inventory purchases 95,500 77,500 90,500
For S&A expenses 36,500 37,500 32,500

Perez Medical had a cash balance of $13,500 on January 1. The company desires to maintain a cash cushion of $10,000. 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. Perez 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 $13,500 $(7,500) $(5,500)
Add: Cash receipts 111,000 117,000 137,000
Cash available 124,500 109,500 131,500
Less: Cash payments
For inventory purchases 95,500 77,500 90,500
For S&A expenses 36,500 37,500 32,500
Interest expense per month
Total budgeted payments 132,000 115,000 123,000
Payments minus receipts
(7,500) (5,500) 8,500
Financing Activity
$(7,500) $(5,500) $8,500

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