Bradley Company has a line of credit with State Bank. Bradley can borrow up to $590,000 at any time over the course of the Year 1 calendar year. The following table shows the prime rate expressed as an annual percentage along with the amounts borrowed and repaid during part of Year 1. Bradley agreed to pay interest at an annual rate equal to 1 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, Bradley pays 7 percent (6 percent + 1 percent) annual interest on $90,000 for the month of January.

Requirments:

1. Calculate Bradley's interest expense for January, February, and March.

2. What TOTAL amount of cash will Bradley pay related to this line of credit in March Year 1?

3. Record the journal entry for the all FEBRUARY and MARCH line of credit transactions.

2 Amount paid by Bradley in March, Year 1