Northern Company is preparing a cash budget for June. The company has $12,000 cash at the beginning of June and anticipates $30,000 in cash receipts and $34,500 in cash payments during June. Northern Company has an agreement with its bank to maintain a minimum cash balance of $10,000. As of May 31, the company had no loans outstanding. To maintain the $10,000 required balance, during June the company must:

a. Repay $2,500.

b. Borrow $2,500.

c. Borrow $7,500.

d. Repay $7,500.

e. Borrow $10,000.