PROBLEM 2James Buchanan Orthotics and Prosthetics is planning to request a line of credit from its bank.The company has produced sales estimates, and these appear in the worksheet below. Collectionestimates are as follows: 10 percent within the month of sale, 75 percent in the month followingthe sale, and 15 percent in the second month following the sale. Labor and supplies estimates alsoappear in the worksheet below. Payments for labor and supplies are typically made during themonth following the one in which these costs have been incurred. General and administrativesalaries will amount to approximately $27,000 a month; lease payments under long-term leasecontracts will be $9,000 a month; depreciation charges will be $36,000 a month; miscellaneousexpenses will be $2,700 a month; income tax payments of $63,000 will be due in both Septemberand December; and a progress payment of $180,000 on a new building must be paid in October.Cash on hand on July 1 will amount to $132,000, and a minimum cash balance of $90,000 will bemaintained throughout the cash budget period. What loan will be the company require in SEPTEMBER?ANSWERTotal collectionsTotal purchasesGeneral and administrative salariesLease paymentsMiscellaneous expensesTaxesProgress paymentTotal paymentsNet cash gain/lossBorrowing/surplus summary:Cash at beginning with no borrowingCash at end with no borrowingTarget cash balance (given)Cumulative surplus cash / loan balance