5. Franklin Company obtained a $120,000 line of credit from the State Bank on January...
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Accounting
5. Franklin Company obtained a $120,000 line of credit from the State Bank on January 1, Year 1. The company agreed to accept a variable interest rate that was set at 3% 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. Borrowing is shown as a positive amount and repayments are shown as negative amounts indicated by parentheses.
Amount Borrowed (Repaid)
Prime Rate for the Month
1-Jan
$
36,000
4.0
%
1-Feb
(13,000)
4.5
%
1-Mar
36,000
5.0
%
Based on this information alone, the amount of interest expense recognized in March would be closest to: (Do not round intermediate calculations. Round your answer to the nearest whole number.)
a) $221
b) $393
c) $197
d) $246
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