All is correct except the interest expense and borrowing. Please show how you got the answer.

Newman Medical Clinic has budgeted the following cash flows.

	January			February			March
Cash receipts	$	119,000		$	125,000		$	145,000
Cash payments
For inventory purchases		99,500			81,500			94,500
For S&A expenses		40,500			41,500			36,500

Newman Medical had a cash balance of $17,500 on January 1. The company desires to maintain a cash cushion of $6,000. Funds are assumed to be borrowed, in increments of $1,000, and repaid on the last day of each month; the interest rate is 2 percent per month. Repayments may be made in any amount available. Newman 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. (Any repayments/shortage should be indicated with a minus sign. Round your answers to the nearest whole dollar amount.)

Cash Budget January February March Beginning cash balance Add: Cash receipt Cash available Less: Cash payments 17,500 $ 119,000 136,500 (4,300) S 125,000 120,700 (2,300) 145,000 142,700 For inventory purchases For S&A expenses Interest expense per month 99,500 40,500 800 81,500 41,500 94,500 36,500 Total budgeted payments 140,800 123,000 131,000 Payments minus receipts Surplus (shortage) (4,300) (2,300) 11,700 Financing Activity Borrowing (repayment) Ending cash balance $(4,300) S (2,300) S 11,700