Question

Colson Company has a line of credit with Federal Bank. Colson can borrow up to $434,500 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 the first four months of the year 2018. Colson agreed to pay interest at an annual rate equal to 3.00 percent above the bank's prime rate. Funds are borrowed or repaid on the first day of the 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, Colson pays 7.25 percent (4.25 percent + 3.00 percent) annual interest on $79,100 for the month of January.

Month                                       Amount Borrowed or Repaid                 Prime Rate for the Month

January $79,100 4.25%

February 123,200 3.25%

March                                      (21,500) 3.75%

April                                          28,000                                                       4.25%

b) Compute the amount of Colson's activity liability at the end of each of the first four months. ( Do not round intermediate calculations, Round your final answers to the nearest whole dollar.)

Answer 1

opening Borroord Repaid cinaruding lue closing liability Interest nonth I Balance 00 600 Jan 2 roo+29100+ sog.22-598.82 223800 feb 100600 + 1103200 +1240.25-12uo. 25 619.55 - 202300 "arch 1923800H NIL + 110.55- =280300 April 202300+ 8000 + 1983.-2 Not Interest calculation January sa = 21 500 - 120.93 .42.99 a 100 x 2.251 LOO S98.81 February G 133200 - 100 GGG 12 120.93 uga. 200. march uaz.89 + Guro G6 1119.55 April 2.8000 - 169.16 u 22.89 64164 12.98-21 indicate payment of Interest prinuple amount of loan. Not? - Repaid column and payment of