The controller of Ultramint Company wishes to improve the company’s control system by preparing a monthly cash budget. The following information relates to the month ending July 31, 2015:

June 30, 2015, cash balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  $ 90,000
Dividends to be declared on July 15* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  . . 24,000
Cash expenditures to be paid in July for operating expenses . . . . . . . . . . . . 73,600
Depreciation expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  . . . 9,000
Cash collections to be received . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  . 178,000
Merchandise purchases to be paid in cash . . . . . . . . . . . . . . . . . . . . . . . . .  . 112,400
Equipment to be purchased for cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . 41,000
Ultramint Company wishes to maintain a minimum cash balance of . . . .. . 50,000

*Dividends are payable to shareholders of record on declaration date, 30 days after declaration.

Required:

1. Prepare a cash budget for the month ended July 31, 2015, indicating how much, if anything, Ultramint will need to borrow to meet its minimum cash requirement.

2. Explain how cash budgeting can reduce the cost of short-term borrowing.