Cheyenne Company has budgeted the following information for June: $\begin{array}{llr}
\text { Cash receipts } &\$271,000\
\text {Beginning cash balance } &5,000\
\text { Cash payments } &280,000\
\text { Desired ending cash balance } &25,000
\end{array}$
If there is a cash shortage, the company borrows money from the bank. All cash is borrowed at the beginning of the month in $1,000 increments, and interest is paid monthly at 1% on the first day of the following month. The company had no debt before June 1. The amount of interest paid on July 1 would be:

Question

Cheyenne Company has budgeted the following information for June: $\begin{array}{llr}
  \text { Cash receipts } &\$271,000\
 \text {Beginning cash balance  } &5,000\
 \text { Cash payments } &280,000\
 \text { Desired ending cash balance } &25,000
\end{array}$
 If there is a cash shortage, the company borrows money from the bank. All cash is borrowed at the beginning of the month in $1,000 increments, and interest is paid monthly at 1% on the first day of the following month. The company had no debt before June 1. The amount of interest paid on July 1 would be:

Quizplus · Accepted Answer

The Answer of Cheyenne Company has budgeted the following information for June: $\begin{array}{llr}
  \text { Cash receipts } &\$271,000\
 \text {Beginning cash balance  } &5,000\
 \text { Cash payments } &280,000\
 \text { Desired ending cash balance } &25,000
\end{array}$
 If there is a cash shortage, the company borrows money from the bank. All cash is borrowed at the beginning of the month in $1,000 increments, and interest is paid monthly at 1% on the first day of the following month. The company had no debt before June 1. The amount of interest paid on July 1 would be:

Cheyenne Company Has Budgeted the Following Information for June If There Is a Cash Shortage, the Company Borrows Money