LO 10-2 Problem 10-27A Effect of a line of credit on financial statements CHECK FIGURES a. Interest Expense: $11,008 Total Assets: $83,992 Boyd Company has a line of credit with State Bank. Boyd can borrow up to $400,000 a 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 Year 1. 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 $100,000 for the month of January