Ferguson Company obtained a $160,000 line of credit from the Metropolitan Bank on January 1, 2014. The

Question:

Ferguson Company obtained a $160,000 from the Metropolitan Bank on January 1, 2014. The company agreed to accept a variable interest rate that was set at 1% above the bank's prime lending rate. The bank's prime rate of interest and the amounts borrowed or repaid during the first three months of 2014 are shown in the following table. Assume that Ferguson borrows or repays on the first day of each month. Borrowing is shown as a positive amount and repayments are shown as negative amounts indicated by parentheses.

Ferguson Company obtained a $160,000 line of credit from the

The amount of interest expense recognized in March, rounded to the nearest dollar, would be
(a). $415.
(b). $346.
(c). $277.
(d). $311

Line of Credit
A line of credit (LOC) is a preset borrowing limit that can be used at any time. The borrower can take money out as needed until the limit is reached, and as money is repaid, it can be borrowed again in the case of an open line of credit. A LOC is...