Question 6. Mott Company has a line of credit with Bay Bank. Mott can borrow up to $580,000 at any time over the course of the 2018 calendar year. The following table shows the prime rate expressed as an annual percentage along with the amounts borrowed and repaid during 2018. Mott agreed to pay interest at an annual rate equal to 1 percent above the banks 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, Mott pays 6 percent (5 percent + 1 percent) annual interest on $78,000 for the month of January.

Month	Amount Borrowed or (Repaid)						Prime Rate for the Month, %
January		$	78,000					5
February			58,000					5
March			(52,000	)				6
April through October	No change						No change
November			(36,000	)				6
December			(28,000	)				5

Mott earned $43,000 of cash revenue during 2018.

b. Prepare an income statement, balance sheet, and statement of cash flows for 2018.

• ncome Statement
• Balance Sheet
• Stmt of Cash Flows

Prepare the income statement for 2018. (Round intermediate calculations and final answers to nearest whole dollar amount.)

income statement

MOTT COMPANY
Income Statement
For the Year Ended December 31, 2018
Expenses

MOTT COMPANY
Balance Sheet
As of December 31, 2018
Assets
Total assets		$0
Liabilities
Total liabilities		0
Stockholders Equity
Total stockholders equity		0
Total liabilities and stockholders equity		$0

MOTT COMPANY
Statement of Cash Flows
For the Year Ended December 31, 2018
Cash flows from operating activities:
Net cash flow from operating activities		$0
Cash flows from investing activities:
Cash flows from financing activities:
Net cash flow from financing activities		0
Net change in cash		0
Ending cash balance		$0