AAA Company is preparing its 3rd quarter budget and provides the following data:

	Jul	Aug	Sep
Cash collections	$50,000	$40,000	$48,000
Cash payments:
Purchases of inventory	31,000	22,000	18,000
Operating expenses	12,000	9,000	11,600
Capital expenditures	13,000	25,000	0

Cash balance at June 30 is projected to be $4,000. The company is required to maintain a minimum cash balance of $5,000 and is authorized to borrow at the end of each month to make up any shortfalls. It may borrow in increments of $5,000 and pays interest monthly at an annual rate of 5%. All financing transactions are assumed to take place at the end of the month. Loan balance should be repaid in increments of $5,000 when there is surplus cash. How much cash shortfall will the company have at the end of July, before financing?

Select one:

A. $6,500

B. $5,000

C. $2,000

D. $1,250