The interaction between a squall line and its environment is examined by using the model of Ogura and Cho (1973). This model incorporates a continuous spectrum of cumulus clouds that are distinguished by their entrainment rates. Conversion of liquid water droplets into raindrops has been included in the cloud microphysical process, but the ice phase has been neglected. By virtue of the cloud spectrum, convective transport terms in the larger scale heat and moisture equations appear as functions of vertical mass flux within the clouds. Once the larger-scale distributions are determined from observations, the vertical mass flux can be found from the budget equations. The cloud populations, i.e., fractional area covered by each cloud category, and the cumulative rainfall rate are functions of this vertical mass flux. A squall line observed in the National Severe Storms Laboratory (NSSL) network on 8 June 1966 is used to test the theory. This squall line encompassed approximately 10% of the area used in the budget calculations. Observed heat and moisture distributions in the larger scale environment of the squall line are explained in terms of the cumulus processes. A comparison between the theoretically-derived cloud population and observed population was made possible by the WSR-57 radar at NSSL. Cloud population was estimated using precipitation reflectivity data from hourly tilt sequences of this 10 cm radar. The observed and theoretical distribution of clouds compared favorably on 1) the relative frequency of tall clouds, and 2) total areal coverage by clouds.