Rachel Robinson owns a small retail store in Cairo, Georgia. The following summary information regarding expectations for the month

of January is provided: As of December $31,$ there is $$1,000$ in the bank and the balance in accounts receivable is $$5,000.$ Budgeted

cash and credit sales for January are $$6,000$ and $$4,000,$ respectively. Ninety percent of credit sales are collected in the month of

sale, and the remainder is collected in the following month. Rachel's suppliers do not extend credit. Cash payments for January are

expected to be $$24,000.$ Rachel has a line of credit that enables the store to borrow funds on demand. However, funds must be

borrowed on the first day of the month and interest paid in cash on the last day of the month. Rachel's bank charges annual interest of

$12\%$ per year. Rachel desires a minimum $$1,000$ cash balance at the end of each month.

Required:

a$.$ Compute the amount of funds that needs to be borrowed.

b$.$ Compute the amount of interest expense that will appear on the January $31$ pro forma income statement.