Boyd Company has a line of credit with State Bank. Boyd can borrow up to $$200,000$ at any time over the course of the calendar year. The following table shows the prime rate expressed as an annual percentage along with the amounts borrowed and repaid during the year. Boyd agreed to pay interest at an annual rate equal to $2$ percent above the bank$$s 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, Boyd pays $7$ percent $(5$ percent $+2$ percent$)$ annual interest on $$117,000$ for the month of January.

Month Amount Borrowed or $($Repaid$)$ Prime Rate for the Month

January $$117,0005\%$

February $56,0006$

March $(31,000)7$

April through October No change No change

November $(73,000)6$

December $(12,000)5$

Boyd earned $$41,000$ of cash revenue during the year.

Required:

Use a horizontal financial statements model. Indicate whether the event increases, decreases, or increases and decreases each element of the financial statements. In the Statement of Cash Flows column, designate the cash flows as operating activities $($OA$),$ investing activities $($IA$),$ or financing activities $($FA$).$

What is the total amount of interest expense paid for the year?