Question

Boyd Company has a line of credit with State Bank. Boyd can borrow up to $200,000 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. Boyd agreed to pay interest at an annual rate equal to 3 percent above the bank's 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, Boyd pays 8 percent (5 percent +3 percent) annual interest on $113,000 for the month of January Prime Rate for the Month 5% Amount Borrowed or Month (Repaid) January $ 113,000 February 53,000 March (35,000) April through October No change November (79,000) December (17,000) Boyd earned $40,000 of cash revenue during 2018, No change Required a. Show the effects of these transactions on the financial statements using a horizontal statements model like the one shown here. Use a + to indicate increase, - for decrease, and if the element is not affected, leave the cell blank. In the Cash Flow column, indicate whether the item is an operating activity (OA), investing activity (IA), or financing activity (FA). b. What is the total amount of interest expense paid for 2018? Complete this question by entering your answers in the tabs below. Required A Required B Show the effects of these transactions on the financial statements using a horizontal statements model like the one shown here. Use a + to indicate increase, - for decrease, and if the element is not affected, leave the cell blank. In the Cash Flow column, indicate whether the item is an operating activity (OA), investing activity (IA), or financing activity (FA). BOYD CO. Horizontal Statements Model Income Statement Equity Revenue - Expense - Net Income Date Balance Sheet = Liabilities + Statement of Cash Flow Assets 1/1 1/31 2/1 2/28 3/1 3/31 4/30 5/31 6/30 7/31 8/31 9/30 10/31 11/1 11/30 12/1 12/31 Required A Required B >

Answer 1

Since you have not mentioned specifically, i am going with ifrs standards

Balance sheet Income statement Liabilities Equity Assets Prime rate Revenue Expenses Net Income 113000 5% 753.33 -753.33 January February March 166000 6% 1245.00 -1245.00 7% 7% 131000 1091.67 -1091.67 April May June 131000 1091.67 -1091.67 131000 7% 1091.67 -1091.67 1091.67 131000 -1091.67 July 131000 1091.67 -1091.67 181000 7% August September 1091.67 -1091.67 796 131000 1091.67 -1091.67 October 131000 1091.67 -1091.67 November December 52000 69% 390.00 -390.00 233.33 39766.67 35000 5% 40000 Total 11355 28645.00 40000

As per ifrs:

Interest or dividend paid can be operating or financing activity

Borrowing is financing acitvity

Repayment if demand from overdraft is operating otherwise it is financing activity

Revenue is operating activity