Colson Company has a line of credit with Federal Bank. Colson can borrow up to $337,500 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 3.00 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, Colson pays 6.50 percent (3.50 percent +3.00 percent) annual interest on $75,700 for the month of January Month January February March April Amount Borrowed or (Repaid) $ 75,700 118,300 (23,100) 31,600 Prime Rate for the Month 3.50% 2.50 3.00 3.50 Required a. Compute the amount of interest that Colson will pay on the line of credit for the first four months of the year. b. Compute the amount of Colson's liability at the end of each of the first four months. Complete this question by entering your answers in the tabs below. Required A Required B Compute the amount of interest that Colson will pay on the line of credit for the first four months of the year. (Round your answers to the nearest whole dollar.) Interest Paid $ 410 Month January February March April 542 115 171 Colson Company has a line of credit with Federal Bank. Colson can borrow up to $337,500 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 3.00 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, Colson pays 6.50 percent (3.50 percent +3.00 percent) annual interest on $75,700 for the month of January. Month January February March Amount Borrowed or (Repaid) $ 75,700 118,300 (23,100) 31,600 Prime Rate for the Month 3.50% 2.50 3.00 3.50 April Required a. Compute the amount of interest that Colson will pay on the line of credit for the first four months of the year. b. Compute the amount of Colson's liability at the end of each of the first four months. Complete this question by entering your answers in the tabs below. Required A Required B Compute the amount of Colson's liability at the end of each of the first four months. (Do not round intermediate calculations. Round your final answers to the nearest whole dollar.) Month Balance End of Month January February Moroh
