GS Cookie Co. forecasts cash receipts for January and February of $18,000 and $20,000, with cash payments of $6,000 and $8,000, respectively. GS Cookie's cash balance at the beginning of January was $5,000, a level that it attempts to maintain. At the beginning of the year, GS Cookie has a $15,000 balance outstanding on its line of credit at the local bank. Based on its cash budget, how much of the line of credit can GS Cookie repay in January?

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In January, GS Cookie forecasts cash receipts of $18,000 and cash payments of $6,000. Starting with a cash balance of $5,000, the company will have a net increase in cash of $12,000 ($18,000 - $6,000) for the month. Since the company aims to maintain a cash balance of $5,000, it can use the entire net increase of $12,000 to repay part of its line of credit.