Question

[The following information applies to the questions displayed below.) Mott Company has a line of credit with Bay Bank. Mott can borrow up to $570,000 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 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, Mott pays 8 percent (7 percent + 1 percent) annual interest on $75,000 for the month of January Prime Rate for the Month, X Month January February March April through October November December Amount Borrowed or (Repaid) $ 75,000 57,000 (50,000) No change (36,000) (22,000) No change Mott earned $42.000 of cash revenue during 2018

Answer 1

MOTT Company
Income statement
For the year ended December 31,2018
Cash Revenue		$        42,000.00
Expenses
Interest expense
(refer calculations)		$          6,805.00
		$        35,195.00
MOTT Company			extract as per data available
Balance sheet
As on December 31,2018
Assets
Total current and non current assets
Libilities
Current liabilities
Bank overdraft		$        24,000.00
Stockholder's equity
Retained Earnings		$        35,195.00
Total liabilities and stockholder's equity
MOTT Company
Statement of Cash Flows
For the year ended December 31,2018
Cash flows from operating activities
Cash revenue earned	$                                42,000.00
Net cash flow from operating Activities		$        42,000.00
Cash flow from Investing activiites		$                       -
Cash flow from finaning activities
Amount borrowed during year	$                              132,000.00
Amount repaid during during	$                            (108,000.00)
Interest paid during year	$                                 (6,805.00)
Net cash flow from Financing Activities		$        17,195.00
Net change in cash		$        59,195.00
Beginning cash balance		$                       -
Ending cash balance		$                       -

Month	Amount borrowed or (repaid)	oustand amount	Prime rate for month	applicable rate	Interest amount
January	$                                75,000.00	$        75,000.00	7%	8%	$    500.00
Feburary	$                                57,000.00	$      132,000.00	7%	8%	$    880.00
March	$                               (50,000.00)	$        82,000.00	8%	9%	$    615.00
april-october	$                                               -	$        82,000.00	8%	9%	$ 4,305.00
november	$                               (36,000.00)	$        46,000.00	8%	9%	$    345.00
december	$                               (22,000.00)	$        24,000.00	7%	8%	$    160.00
				Total Interest	$ 6,805.00

NOte:- Figures have filled as per data given in question only.