On January 1, 2014, Hays Corporation arranged a $3,000 line of credit with the Barnett Bank. It agreed to accept the bank's offer of 1% above the prime rate with interest payments on December 31 of each year. All borrowings and payments on principal are to take place on January 1 of each year. Hays paid the first year's interest payment on December 31, 2014. Barnett Bank's prime rate was 4 percent for 2014. Which of the following answers shows the effect of this event on the financial statements?

Question 10 options:

1)

Choice A

2)

Choice B

3)

Choice C

4)

Choice D