Franklin Company Obtained a $155,000 Line of Credit from the State

question 16

Multiple Choice

Franklin Company obtained a $155,000 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. $\begin{array}{lrr}&\text { Amount Borrowed (Repaid) }&\text { Prime Rate for the Month }\\1 \text {-January } & \$ 50,000 & 4.0 \% \\\text { 1-February } & (20,000) & 4.5\% \\\text { 1-March } & 50.000 & 5.0 \%\end{array}$
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.)

• A) $267.
• B) $300.
• C) $333.
• D) $467.

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