On April 15, 2025, Sage, Inc. opens a line of credit with United Bank. Sage can borrow up to $500,000 at any time over the course of the calendar year. Sage agreed to pay interest at an annual rate equal to 2.50 percent above the banks prime rate.

The following table shows the prime rate expressed as an annual percentage along with the amounts borrowed and repaid during the first three months of 2025. 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.

Required:

a. How much interest does Sage pay on May 31, 2025?

b. How much interest does Sage pay on June 30, 2025?

c. How much interest does Sage pay on July 31, 2025?

d. Record the necessary journal entries for the months of April and July, 2025. Note: all entries need to be to 2 decimal places.

Month	Amount Borrowed or (Repaid)	Prime Rate for the Month
May	80,000	3.50%
June	50,000	3.00%
July	(25,000)	3.25%