The Beaches has just hired you to work in the accounting department, a popular year-round family-oriented vacation destination. One of your first tasks is to prepare a cash budget for the Palm Lounge (PL) for the month of July. PL is a specialty refreshment shop for vacationers at the resort. You have been told that PL requires a minimum cash balance of $5,000 at the beginning of each month. You have also been given the following information to help with your budget.

1. PL has an agreement with the bank that allows it to borrow short-term operating funds in increments of $1,000 at an interest rate of 8% per year. Borrowing occurs on the first day of the month and repayment in $1,000 increments, along with any interest on the funds repaid, occurs on the last day of the month. No other cash transactions occur on these days.

2. June sales were $130,000. July sales are budgeted to be $120,000. 15% of sales are cash; the remainder is on account. 70% of credit sales are typically received in the month of the sale, with 26% received in the following month. The rest is uncollectible and must be written off in the month following the sale.

3. Food purchases for PL were $98,000 in June and are expected to be $83,000 in July. All purchases are on account. PL pays 25% in the month of purchase and 75% in the following month.

4. Most of the PL work is done by Mrs. Wang, who typically withdraws a monthly salary of $8,000 from the business. Various part-time staff who work in the PL are paid a total of $14,400 per month. All part-time workers are paid weekly, with 90% of their wages paid in the month incurred and the remaining 10% paid in the following month.

5. The monthly cash payment for utilities is $5,200 and for supplies is $3,600. Monthly depreciation on the building is $2,000.

6. Insurance of $300 per month is paid quarterly; the next payment is due on July 15.

7. Although May had ended with a deficit of $4,500, by the June 30 SL had a positive cash balance of $5,680.

Required:

Prepare a cash budget in good form for the month of July. If the August 31 cash balance was $35,000, would there be any August transactions with the bank related to borrowing? If so, please provide details of any amounts. If not, please explain why.