Scotiabank approved a $250,000.00 line of credit for Buhler Industries at prime + 1%. It requires only the repayment ofaccrued interest on the 24th of each month, which is automatically deducted from the checking account of Buhler Industries.Buhler took out an advance on December 18 for $195,000.00 and made a payment of $160,000.00 on January 16. The primerate was 6.25% initially and increased to 7.25% on January 5.Complete the repayment schedule below by filling in the payment and principal amounts.DateBalance Annualbefore InterestTransaction RateNumberof DaysInterest AccruedCharged InterestPayment(+) orAdvancePrincipalAmountBalance afterTransaction(-)Dec 18$195,000.00Dec 24 $195,000.007.25%6/365$232.40$232.40$195,000.00Jan 5$195,000.007.25%12/365$464.79$464.79$195,000.00Jan 16$195,000.00 8.25%11/365$484.83 $949.62$35,000.00Jan 24$35,000.008.25%8/365$63.29$1,012.91$35,000.00

Part 2: Explanation:Step 1: Calculate the interest charged on December 18: - Annual interest rate:…

Answered: Scotiabank approved a $250,000.00 line…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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An automotive dealer borrowed $8200.00 from the Bank of Montreal on a demand note on May 8. Interest on the loan, calculated on the daily balance, is charged to the dealer's current account on the 8th of each month. The automotive dealer made a payment of $2300 on July 12, a payment of $3900 on October 1, and repaid the balance on December 1. The rate of interest on the loan on May 8 was 8% per annum. The rate was changed to 8.6% on August 1 and to 8.95% on October 1. What was the total interest cost for the loan?
Loans Scotiabank approved a $230.000.00 line of credit for Buhler Industries at prime + 1%. It requires only the repayment of accrued interest on the 24th of each month which is automatically deducted from the checking account of Buhler Industries. Buhler took out an advance on December 6 for $160,000.00 and made a payment of $130,000.00 on January 16 The prime rate was 5.25% initially and increased to 6.5% on January 7. Complete the repayment schedule below by filling in the payment and principal amounts. Payment Date Balance Annual before Interest Transaction Rate Number of Days Interest Accrued Charged Interest (+) or Principal Balance after Advance Amount Transaction (-) Dec 6 $160,000.00 Dec 24 $160.000,00 $160,000.00 Jan 7 Jan 16 $160,000.00 $30,000.00 Jan 24 6.25% 18/365 7.5% 8/365 6.25% 14/365 $383.56 7.5% 9/365 $295.89 $679.45 $49.32 $728.77 $493.15 $493.15 $383.56 $160,000.00 $160,000.00 $30,000.00 $30,000.00 Notes You con can partial credit on this problem
On April 12, Hong Company agrees to accept a 60-day, 8%, $7,800 note from Indigo Company to extend the due date on an overdue account. What is the journal entry that Indigo Company would make when it records payment of the note on the maturity date? (Use 360 days a year.)
On July 15, when the prime rate was set at 4.25%, Canadian Footwear took out an operating loan from CIBC for $9,000.00 at prime plus 1.75%. The terms of the loan require a fixed payment of $1,690.00 on the 15th of every month until the loan is repaid. The prime rate climbed by 0.25% on September 21. Complete the repayment schedule below by filling in the appropriate interest rates. Date Jul 15 Aug 15 Sep 15 Sep 21 Oct 15 Nov 15 Dec 15 Jan 15 Balance before Transaction $9,000.00 $7,355.86 $5,703.34 $5,703,34 $4,042.41 $2,373.87 $696.06 Annual Interest Rate * * * * * $45.86 $37.48 $5.63 24/365 $23.44 31/365 $21.46 % 30/365 $12,19 31/365 % % % % % Number Interest Accrued of Days Charged Interest % 31/365 31/365 6/365 Payment (+) or Principal Advance Amount (-) $45.86 $1,690.00 $1,644,14 $37.48 $1,690.00 $1.652.52 $5.63 $0.00 $0.00 $1,690.00 $1,660.93 $29.07 $21.46 $1,690.00 $1,668.54 $1,690.00 $1,677.81 $699.75 $696.06 $12.19 $3.69 $3,69 Balance after Transaction $9,000.00 $7,355.86…
None
Colson Company has a line of credit with Federal Bank, Colson can borrow up to $386,000 at any time over the course of the 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. Colson agreed to pay interest at an annual rate equal to 2.50 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, Colson pays 6.25 percent (3.75 percent + 2.50 percent) annual interest on $81,000 for the month of January. Month January February March April Amount Borrowed or (Repaid). $ 81,000 117,900 (24,400) 27,600 Required a. Compute the amount of interest that Colson will pay on the line of credit for the first four months of the year. b. Compute the amount of Colson's liability at the end of each of the first…
Somber Company borrows $892,000 from Silver Financing Associates by securing a revolving line of credit at a 9% interest rate on April 15. Interest is due and payable at the end of each month based on the outstanding balance at the beginning of the month. Somber assigns $939,000 of its accounts receivable as collateral for the lending arrangement. Assume that accounts receivable are collected at the end of the month and the proceeds are remitted to Silver at the end of the month. Month Accounts Receivable Collected April 140,000 May 490,000 June 117,000 Requirements a. Compute the balance of notes payable at the end of each month. b. Prepare the necessary journal entries for these transactions. c. If the accounts receivable had been pledged as collateral, what entry would be made at April 15? A: Notes Notes Payable Accounts Payable Beginning Interest Receivable Cash Paid Ending Month…
Loans Scotiabank approved a $230,000.00 line of credit for Buhler Industries at prime + 1%. It requires only the repayment of accrued interest on the 24th of each month, which is automatically deducted from the checking account of Buhler Industries. Buhler took out an advance on December 6 for $160,000.00 and made a payment of $130,000.00 on January 16. The prime rate was 5.25% initially and increased to 6.5% on January 7. Complete the repayment schedule below by filling in the payment and principal amounts. Date Balance Annual before Interest Transaction Rate Number Interest of Days Charged Accrued Interest Payment (+) or Advance (-) Principal Balance after Amount Transaction Dec 6 Dec 24 $160,000.00 $160,000.00 6.25% 18/365 $493.15 $493.15 $160,000.00 Jan 7 6.25% $160,000.00 14/365 $383.56 $383.56 $160,000.00 Jan 16 $160,000.00 7.5% 9/365 $295.89 $679.45 $30,000.00 Jan 24 $30,000.00 7.5% 8/365 $49.32 $728.77 $30,000.00 You can earn partial credit on this problem.
$120,000 of its accounts receivable to 2nd National Bank as collateral for a $70,000 loan due August 1 of the same year. The assignment agreement calls for Bay Co. to continue to collect the receivables. The bank assesses a finance charge of 3% of the accounts receivable. The interest rate on the loan is 8% which is a realistic interest rate for this type of loan. Prepare the journal entry that Bay Co. would make on February 1 Prepare the journal entry for Bay's collection of $50,000 of the receivables between February 1 and July 31. Prepare the journal entry to record Bay Co.'s payment to the bank.
Franklin Company obtained a $110,000 line of credit from the State Bank on January 1, Year 1. The company agreed to accept a variable interest rate that was set at 2% above the bank's prime lending rate. The bank's prime rate of interest and the amounts borrowed or repaid during the first three months of Year 1 are shown in the following table. Assume that Franklin borrows or repays on the first day of each month. Borrowing is shown as a positive amount and repayments are shown as negative amounts indicated by parentheses. 1-January 1-February 1-Marchi Amount Borrowed Prime Rate for the Month 4.08 4.58 5.08 Based on this information alone, the amount of interest expense recognized in March would be closest to: (Do not round intermediate calculations. Round your answer to the nearest whole number.) Multiple Choice $177, $309. (Repaid) $ 32,000 (11,000) 32,000 $199.
Vertical Adventures has an open line of credit with a zero balance at its credit union using a fixed interest rate of 7.05%. On the last day of every month, the accrued interest must be paid. On July 8 and August 14, the company made advances of $13,500.00 and $13,750.00, respectively. On July 30, it made a payment of $8,500.00. Vertical Adventures will restore its zero balance on August 31. Construct a full repayment schedule from July 8 to August 31. (Round all monetary values to the nearest penny.) (Use a minus sign before the dollar sign to denote a negative monetary value. For example, "-$149.63".) (Give all "Number of Days" quantities as fractions with denominator 365.) Date Balance before Transaction Annual Interest Rate Number Interest Accrued of Days Charged Interest Payment (+) or Principal Balance after Advance Amount Transaction Jul 8 Jul 30 7.05% Jul 31 7.05% Aug 14 7.05% Aug 31 7.05% (-) $13,500.00

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