Solomon Medical Clinic has budgeted the following cash flows:

	January			February			March
Cash receipts	$	114,000		$	120,000		$	140,000
Cash payments
For inventory purchases		97,000			79,000			92,000
For S&A expenses		38,000			39,000			34,000

Solomon Medical had a cash balance of $15,000 on January 1. The company desires to maintain a cash cushion of $7,000. 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. Solomon 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	$15,000	$(7,200)	$(5,200)
Add: Cash receipts	114,000	120,000	140,000
Cash available	129,000	112,800	134,800
Less: Cash payments
For inventory purchases	97,000	79,000	92,000
For S&A expenses	38,000	39,000	34,000
Interest expense per month	1,200
Total budgeted payments	136,200	118,000	126,000
Payments minus receipts
Surplus (shortage)	(7,200)	(5,200)	8,800
Financing Activity
Borrowing (repayment)	0
Ending cash balance	$(7,200)	$(5,200)	$8,800