Mott Company has a line of credit with Bay Bank. Mott can borrow up to $570,000...

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Accounting

Mott Company has a line of credit with Bay Bank. Mott can borrowup to $570,000 at any time over the course of the calendar year.The following table shows the prime rate expressed as an annualpercentage along with the amounts borrowed and repaid during theyear. Mott agreed to pay interest at an annual rate equal to 1percent above the bank’s prime rate. Funds are borrowed or repaidon the first day of each month. Interest is payable in cash on thelast day of the month. The interest rate is applied to theoutstanding monthly balance. For example, Mott pays 8 percent (7percent + 1 percent) annual interest on $75,000 for the month ofJanuary. Month Amount Borrowed or (Repaid) Prime Rate for theMonth, % January $ 75,000 7 February 57,000 7 March (50,000 ) 8April through October No change No change November (36,000 ) 8December (22,000 ) 7 Mott earned $42,000 of cash revenue during theyear.
b.Prepare an income statement, balance sheet, and statement ofcash flows for the year.
Complete this question by entering your answers in thetabs below.
Income Statement
Balance Sheet
Stmt of Cash Flows
Prepare the income statement for the year.

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Solution MOTT Company Income statement Cash Revenue 4200000 Expenses Interest expense refer calculations 680500 3519500 MOTT Company Balance sheet Assets Total current and non current assets Libilities Current liabilities Bank See Answer

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