Singer Company has a line of credit with United Bank. Singer can borrow up to...
70.2K
Verified Solution
Link Copied!
Question
Accounting
Singer Company has a line of credit with United Bank. Singer can borrow up to $422,500 at 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 the first three months of Year 1. Singer agreed to pay interest at an annual rate equal to 2.00 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, Singer pays 6.00 percent (4.00 percent + 2.00 percent) annual interest on $84,300 for the month of January.
Month
Amount Borrowed or (Repaid)
Prime Rate for the Month
January
$84,300
4.00%
February
117,500
3.00
March
(16,300)
3.50
Required
Provide all journal entries pertaining to Singers line of credit for the first three months of Year 1.
Answer & Explanation
Solved by verified expert
Get Answers to Unlimited Questions
Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!
Membership Benefits:
Unlimited Question Access with detailed Answers
Zin AI - 3 Million Words
10 Dall-E 3 Images
20 Plot Generations
Conversation with Dialogue Memory
No Ads, Ever!
Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
