Question
Franklin Company obtained a $145,000 line of credit from State Bank on January 1, Year 1. The company agreed to accept a variable interest rate
Franklin Company obtained a $145,000 line of credit from State Bank on January 1, Year 1. 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 Year 1 are shown in the following table. Assume that Franklin borrows or repays on the first day of each month.
Amount Borrowed or (Repaid) | Prime Rate for the Month | ||||||
1-Jan | $ | 46,000 | 4.0 | % | |||
1-Feb | (18,000 | ) | 4.5 | % | |||
1-Mar | 46,000 | 5.0 | % | ||||
What is the amount of interest expense recognized in March? (Do not round your intermediate calculations. Round your final answer to the nearest whole number.)
Multiple Choice
-
$308
-
$370
-
$278
- $247
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