Boyd Company has a line of credit with State Bank. Boyd can borrow up to $500,000 at any time over the course of the Year 1calendar year. The following table shows the prime rate expressed as an annual percentage along with the amounts borrowed andrepaid during Year 1. Boyd agreed to pay interest at an annual rate equal to 1 percent above the bank's prime rate. Funds are borrowedor 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 theoutstanding monthly balance. For example, Boyd pays 6 percent (5 percent +1 percent) annual interest on $70,000 for the month ofJanuary.Amount Borrowedor (Repaid)$ 70,00050,000(42,000)No change(30,000)(20,000)Boyd earned $35,000 of cash revenue during Year 1.MonthJanuaryFebruaryMarchApril through OctoberNovemberDecemberIncomeStatementRequiredPrepare an income statement, balance sheet, and statement of cash flows for Year 1.Service revenueExpensesInterest expenseIncomeStatementBalance SheetPrepare an income statement for Year 1. (Do not round intermediate calculations.)BOYD COMPANYIncome StatementFor the Year Ended December 31, Year 1AssetsBalance SheetTotal AssetsLiabilitiesStockholders' EquityCommon stockIncomeStatementvoliv by entering your answers in the tabs below.Prime Ratefor theCash FlowsMonth5%56No changeTotal Stockholders' EquityTotal Liabilities and Stockholders' Equity$Prepare a balance sheet for Year 1. (Do not round intermediate calculations.)Cash FlowsEnding cash balanceCash flows from operating activities:BOYD COMPANYBalance SheetAs of December 31, Year 1Net cash flow from operating activitiesCash flows from investing activitiesCash flows from financing activities:< Income StatementBalance Sheet Cash FlowsNet cash flow from financing activitiesNet change in cash0< Income StatementBOYD COMPANYStatement of Cash FlowsFor the Year Ended December 31, Year 1Prepare a statement of cash flows for Year 1. (Do not round intermediate calculations. Ente$< Balance Sheet$Balance Sheet$000Cash Flows000Cash Flows >

Prepare an income statement:- BOYD COMPANY Income Statement For the year ended December…

Boyd Company has a line of credit with State Bank. Boyd can borrow up to $500,000 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 Year 1. Boyd 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, Boyd pays 6 percent (5 percent +1 percent) annual interest on $70,000 for the month of January. Amount Borrowed or (Repaid) $ 70,000 50,000 (42,000) No change (30,000) (20,000) Boyd earned $35,000 of cash revenue during Year 1. Month January February March April through October November December Prime Rate for the Month 5X 5 No change 6 5

Boyd Company has a line of credit with State Bank. Boyd can borrow up to $500,000 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 Year 1. Boyd 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, Boyd pays 6 percent (5 percent +1 percent) annual interest on $70,000 for the month of January. Amount Borrowed or (Repaid) $ 70,000 50,000 (42,000) No change (30,000) (20,000) Boyd earned $35,000 of cash revenue during Year 1. Month January February March April through October November December Prime Rate for the Month 5X 5 No change 6 5

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter16: Working Capital Policy And Short-term Financing

Section: Chapter Questions

Problem 30P

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Question

Boyd Company has a line of credit with State Bank. Boyd can borrow up to $500,000 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 Year 1. Boyd 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, Boyd pays 6 percent (5 percent +1 percent) annual interest on $70,000 for the month of
January.
Amount Borrowed
or (Repaid)
$ 70,000
50,000
(42,000)
No change
(30,000)
(20,000)
Boyd earned $35,000 of cash revenue during Year 1.
Month
January
February
March
April through October
November
December
Income
Statement
Required
Prepare an income statement, balance sheet, and statement of cash flows for Year 1.
Service revenue
Expenses
Interest expense
Income
Statement
Balance Sheet
Prepare an income statement for Year 1. (Do not round intermediate calculations.)
BOYD COMPANY
Income Statement
For the Year Ended December 31, Year 1
Assets
Balance Sheet
Total Assets
Liabilities
Stockholders' Equity
Common stock
Income
Statement
voliv by entering your answers in the tabs below.
Prime Rate
for the
Cash Flows
Month
5%
5
6
No change
Total Stockholders' Equity
Total Liabilities and Stockholders' Equity
$
Prepare a balance sheet for Year 1. (Do not round intermediate calculations.)
Cash Flows
Ending cash balance
Cash flows from operating activities:
BOYD COMPANY
Balance Sheet
As of December 31, Year 1
Net cash flow from operating activities
Cash flows from investing activities
Cash flows from financing activities:
< Income Statement
Balance Sheet Cash Flows
Net cash flow from financing activities
Net change in cash
0
< Income Statement
BOYD COMPANY
Statement of Cash Flows
For the Year Ended December 31, Year 1
Prepare a statement of cash flows for Year 1. (Do not round intermediate calculations. Ente
$
< Balance Sheet
$
Balance Sheet
$
0
0
0
Cash Flows
0
0
0
Cash Flows >

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