Preparing a cash budget
Kinnion Medical Clinic has budgeted the following cash flows.
| January | February | March |
Cash receipts | $100,000 | $106,000 | $126,000 |
Cash payments |
|
|
|
For inventory purchases | 90,000 | 72,000 | 85,000 |
For S&A expenses | 31,000 | 32,000 | 27,000 |
Kinnion Medical had a cash balance of $8,000 on January 1. The company desires to maintain a cash cushion of $5,000. Funds are assumed to be borrowed, in increments of $1,000, and repaid on the last day of each month; the interest rate is 1 percent per month. Kinnion pays its vendor 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. (Round all computations to the nearest whole dollar.)
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