Headsmart is currently preparing a cash budget for the first two months of fiscal year 2021. The budget is only partially completed as shown below. The following additional information has been gathered to complete it.

1. A line of credit is available at a local bank that allows the company to borrow up to $80,000. All borrowing takes place at the beginning of a month, and all repayment takes place at the end of a month. Any interest incurred during the periods will be paid only at the end of February. The interest rate is currently 18% per year.
2. The company desires a minimum cash balance of $20,000 at the end of each month. The cash balance at the beginning of January was $30,000.
3. Additional expenditures: Property taxes of $20,000 will be paid in January and new equipment will be purchased for $10,000 in February.

	January	February
Cash balance, beginning	$	$
Cash receipts: Cash collections	100,000	280,000
Total cash available
Cash disbursements: Production Selling & administrative Additional expenditures	70,000 70,000	120,000 90,000
Total disbursements
Excess (deficiency) of cash available over disbursements
Financing: Borrowings Repayments Interests	(a)	(b)
Total financing
Cash balance, ending	$	$ (c)

How much cash balance must be expected at the end of February as will be shown in (c)?

Group of answer choices

A. $29,100

B. $21,000

C. $38,500

D. $28,500

How much borrowing must be planned in January as will be shown in (a)?

Group of answer choices

A. $10,000

B. $30,000

C. No borrowing is necessary.

D. $50,000

What is the amount of interest to be paid in February as will be shown in (b)?

Group of answer choices

A. $750

B. $900

C. $9,000

D. $1,500