Reference no: EM132557523

Ottawa Publishing has a line of credit with their bank and must keep a $10,000 minimum balance each month. There is no outstanding loan at the beginning of January. Loans can be borrowed and repaid in any amount. The cash balance on January 1 is expected to be $12,000.

Sales were $35,000 in December, and are budgeted to be $11,000 in January and $25,000 in February. All sales are on account and are collected 50% in the month of sale and 50% in the following month.

Purchases are budgeted to be $27,000 in January and $11,600 in February. Purchases are paid in full in the month of purchase.

All other expenses are listed below, and are all paid in cash in the month incurred:

Salaries $700 per month

Commissions 10% of sales per month

Rent $500 per month

Advertising $200 per month

A. IF WE MAKE A cash budget for January for Ottawa Publishing

Question 1: What is the repayment for January

Option a. $4,500

Option b. $4,500

Option c. $2,500

Option d. $3,500