Cash receipts $40,000

Beginning cash balance $10,000

Cash Payments $48,000

Desired ending cash balance $7,000

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. Interest is paid monthly on the first day of the following month. The interest rate is 1% per month. The company had no debt before January 1st. What is the amount of interest paid in February? Please show all work and explanation