Graceful Gems Company requires a minimum ending cash balance of $20,000 for any quarter. If Graceful begins the 1st quarter with cash of $20,000 and they expect to collect cash of $31,000 for the current quarter cash sales and 80% of their $59,000 accounts receivable sales. They have cash operating expenses of $104,000. What will be the interest expense , if any, if they need to borrow any money on Jan 1st to meet their minimum cash balance at the end of the 1st quarter? Assume the annual interest rate is 12%.

• $581
• $194
• $774
• $696