Western Company is preparing a cash budget for June. The company has $10,000 in cash at the beginning of June and anticipates $32,000 in cash receipts and $38,500 in cash payments during June. Western Company has an agreement with its bank to maintain a minimum cash balance of $10,000. As of May 31, the company has no loans outstanding. To maintain the $10,000 required balance, during June the company must:

Multiple Choice

Borrow $10,000.

Repay $6,500.

Borrow $6,500.

Borrow $6,800.

Repay $3,500.