Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. accounting
  3. colson company has a line of credit with federal b

Colson Company has a line of credit with Federal Bank. Colson can...

60.2K

Verified Solution

Question

Accounting

Colson Company has a line of credit with Federal Bank. Colson can borrow up to $411,000 at any time over the course of the calendar year. The following table shows the prime rate expressed as an annual percentage along with the amounts borrowed and repaid during the first four months of the year. Colson agreed to pay interest at an annual rate equal to 2.00 percent above the banks prime rate. Funds are borrowed or repaid on the first day of each month. Interest is payable in cash on the last day of the month. The interest rate is applied to the outstanding monthly balance. For example, Colson pays 5.75 percent (3.75 percent +2.00 percent) annual interest on $76,400 for the month of January.
Month Amount Borrowed
or (Repaid) Prime Rate for
the Month
January $ 76,4003.75%
February 117,3002.75
March (20,800)3.25
April 27,3003.75
Required
Compute the amount of interest that Colson will pay on the line of credit for the first four months of the year.
Compute the amount of Colson's liability at the end of each of the first four months.

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Zin AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students

Q

The loop of Henle is considered an engineering marvel. If the loop were straight, what negative...

Medical Sciences
Q

how has radio impacted society both practically and theoretically?

Electrical Engineering
Q

is it worth now days to get certificatiions in supply chain industries nowdays; do companies place...

General Management
Q

Which amino acid has an R group that forms a covalent bond with the polypeptide...

Biology
Q

Major arc JL measures 300 300 M K Which describes triangle JLM Oright obtuse O...

Geometry
Q

Verge, ine has twe peodycts-le Cedce and La Bougin Financial data...

Accounting
Q

Jane's Auto Care is considering the purchase of a new tow truck. The garage doesn't...

Accounting
Q

The December bank statement and cash T-account for Stewart Company follow: ...

Accounting
Q

Colter Company prepares monthly cash budgets. Relevant data from operating budgets for 2020 are as...

Accounting
Q

1. In 2016, XYZ Enterprises purchases equipment for $60,000. The equipment is sold in 2019...

Accounting
Q

how do you express on a journal entry: purchasing plumbing equipment for $25,000 making a...

Accounting
Q

Elizabeths factory is completely destroyed in a fire. Her basis in the factory was $3...

Accounting