Upton Company Obtained an $80,000 Line of Credit from the Key

question 127

Multiple Choice

Upton Company obtained an $80,000 line of credit from the Key State Bank on January 1, 2014. 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 2014 are shown in the following table. Assume that Upton 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. The amount of interest expense recognized in March, rounded to the nearest dollar, would be:

• A) $116.
• B) $131.
• C) $146.
• D) $204.

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Definitions:

Duty to Drive

A legal obligation for drivers to operate vehicles with due care and in accordance with traffic laws.

Bank Damages

Bank damages refer to financial losses or penalties that a bank must pay due to legal judgments, breaches of contract, or other forms of liability.

Slander

A form of defamation expressed in spoken words, gestures or other transitory means, causing harm to a person’s reputation.

Libel

A published false statement that is damaging to a person's reputation; a written form of defamation.