Newman Medical Clinic has budgeted the following cash flows. January February March
Cash receipts $105,000 $111,000 $131,000
Cash payments
For inventory purchases 92,500 74,500 87,500
For S&A expenses 33,500 34,500 29,500
Walton Medical had a cash balance of $17,000 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. Repayments may be made in any amount available. Walton 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.