1. What is the expected loan balance at the end of Month 1
2. What is the expected loan balance at the end of Month 2
3. What is the expected loan balance at the end of Month 3
4. If interest is paid on the loan, what is the expected amount of the interest and when is it expected to be paid?
5. Is the line of credit adequate?

Mr. Puffin is currently developing the cash budget for the first three months of operation as well as an investment in machinery in the 3rd month. Mr. Puffin needs assistance determining the financing needs.

Specifically, he wants to know how much to borrow or repay, including interest, each month.

The first month's beginning cash balance is expected to be $22,000.

Each month requires a minimum ending cash balance of $20,000.

The expected cash collections from revenues for months 1, 2, and 3 are $50,000, $90,000, and $70,000, respectively.

The budgeted operating costs for months 1, 2, and 3 are $60,000, $80,000, and $50,000, respectively.

These costs include budgeted depreciation expense for months 1, 2, and 3 of $5,000, $10,000 and $11,000 respectively.

The third month also includes a $100,000 cash outflow for an investment in new machinery.

Mr. Puffin has access to an $80,000 line of credit, with 10% annual interest rate.

For budgeting purposes, borrowings occur on the 1st day of the month and repayments occur as soon as possible with payment on the last day of the month.

Round interest calculations to nearest whole number.

For budgeting purposes, borrowings occur on the 1st day of the month and repayments occur as soon as possible with payment on the last day of the month.

Round interest calculations to nearest whole number.