Western Company is preparing a cash budget for June. The company has $12,000 in cash at the beginning of June and anticipates $30,000 in cash receipts and $34,500 in cash payments during June. Western Company has an agreement with its bank to maintain a minimum cash balance of $10,000. As of May 31, the company has no loans outstanding. To maintain the $10,000 required balance, during June the company must:
A. Repay $7,500.
B. Borrow $10,000.
C. Repay $2,500.
D. Borrow $2,500.
E. Borrow $4,500.
Answer: D
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