Solar Construction Limited $($SCL$)$ has a cash balance of $$300,000$ on January $1,2020.$ It produces custom$-$made sunrooms to size specifications set by

the customer. SCL has decided to upgrade its IT system to a fully automated system that it will track an order, direct the production line to produce and

package the required components $($steel$,$ glass, seals$)$ based on customer specifications, update the finished goods inventory once production is

completed, delete from inventory on installation, and prepare the invoice. SCL is at the initial stages of planning this upgrade. Most of the needs analysis

has been completed. The timing and cost estimates for the project are as follows:

Needs analysis, review of proposals, and selection of the new system $-$ October $1$ to December $31,2019$

A system selection consultant has already been hired and will be paid $$50,000$ on February $15.$

Testing of the new system $-$ March $1$ to April $30$

Implementation $-$ May $1$ to June $30.$ This will allow the new system to be fully up and running during key construction months.

Costs estimates:

Hardware $-$ payable January $1$

Software $-50\%$ payable January $31$;$50\%$ payable May $31$

Ongoing maintenance costs $-$ payable June $1$

Staff training $-$ payable June $30$

Additional staff required during the testing and implementation stages

$$27,000$ per month January $1$ to June $30$

$$450,000$

$$280,000$

$$40,000$

$$20,000$

$$162,000$

The company has already prepared its cash budget for its operations that shows the net cash flows for each month as follows:

Required:

Prepare a cash budget $($projection of net cash flows and cash balance$)$ for the six months to June. Determine the highest amount that the company will

have to borrow under its line of credit to finance this upgrade.