Question - Janus Industries has budgeted the following information for January:
Cash Receipts $40,000
Beginning Cash Balance $10,000
Cash Payments $48,000
Desired Ending Cash Balance $ 5,000
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. Interest is paid monthly on the first day of the following month. The interest rate is 1% per month. The company had no debt before January 1st.
The amount of interest paid in February would be
a. $50.
b. $300.
c. $500.
d. $30.