Question

Gibson Medical Clinic has budgeted the following cash flows.

	January			February			March
Cash receipts	$	108,000		$	114,000		$	134,000
Cash payments
For inventory purchases		94,000			76,000			89,000
For S&A expenses		35,000			36,000			31,000

Gibson Medical Clinic has budgeted the following cash flows.

	January			February			March
Cash receipts	$	108,000		$	114,000		$	134,000
Cash payments
For inventory purchases		94,000			76,000			89,000
For S&A expenses		35,000			36,000			31,000

Gibson Medical Clinic has budgeted the following cash flows.

January February March

cash receipts 108,000 114,000 134000

cash payments -- -- --

for inventory purchases 94,000 76,000 89,000

for S&A expenses 35,000 36,000 31,000

Gibson Medical had a cash balance of $12,000 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. Gibson 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 year’s quarterly results.

Required: Prepare a cash budget.

Note: I mostly just need help finding the interest expense for March (I already know that it's 1,200 for January, and 1,740 for February) and I need help finding the borrowing repayment for February and March (I already know that it's 18,000 for January).

Answer 1