Cheyenne Company Has Budgeted the Following Information for June If There Is a Cash Shortage,the Company Borrows Money from \text

question 31

Multiple Choice

Cheyenne Company has budgeted the following information for June: $\begin{array}{|l|r|}\hline \text { Cash receipts }& \$ \quad 271,000\\\hline \text { Beginning cash balance } & 5,000 \\\hline \text { Cash payments } & 280,000 \\\hline \text { Desire dending cash balance } & 25,000\\\hline\end{array}$ If there is a cash shortage,the company borrows money from the bank.All cash is borrowed at the beginning of the month in $1,000 increments and interest is paid monthly at 1% on the first day of the following month.The company had no debt before June 1^st.The amount of interest paid on July 1 would be:

• A) $250.
• B) $400.
• C) $221.
• D) $290.

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