Western Company is preparing a cash budget for June. The company has $11,500 in cash at the beginning of June and anticipates $30,500 in cash receipts and $35,500 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

• Repay $3,500.
• Borrow $5,000.
• Borrow $10,000.
• Repay $6,500.
• Borrow $3,500.