Boyd Company has a line of credit with State Bank. Boyd can borrow up to $400,000 at
Question:
The interest rate is applied to the outstanding monthly balance. For example, Boyd pays 7 percent (5 percent + 2 percent) annual interest on $100,000 for the month of January.
Boyd earned $45,000 of cash revenue during 2016.
Required
a. Prepare an income statement, balance sheet, and statement of cash flows for 2016.
b. Write a memo to explain how the business was able to generate retained earnings when the owner contributed no assets to the business.
A line of credit (LOC) is a preset borrowing limit that can be used at any time. The borrower can take money out as needed until the limit is reached, and as money is repaid, it can be borrowed again in the case of an open line of credit. A LOC is...
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Related Book For
Fundamental Financial Accounting Concepts
ISBN: 978-0078025907
9th edition
Authors: Thomas Edmonds, Christopher Edmonds
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