On January 1, 2013, Hays Corporation arranged a $3,000 line of credit with the Barnett Bank. It agreed to accept the bank's offer of 1% above the prime rate with interest payments on December 31 of each year. All borrowings and payments on principal are to take place on January 1 of each year.

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On January 1, 2013, Hays borrowed an additional $1,000 from Barnett Bank, bringing the total amount borrowed to $2,000. On January 1, 2014, Hays paid $500 on the principal of the loan On December 31, 2014, Hays records the 2014 interest payment. The prime rate for 2014 was 5 percent. Which of the following answers shows the effect of the 2014 interest payment on the financial statements? A) (75) B) (75) (90) D) Assets On January 1, 2013, Hays borrowed an additional $1,000 from Barnett Bank, bringing the total amount borrowed to $2,000. On January 1, 2014, Hays paid $500 on the principal of the loan On December 31, 2014, Hays records the 2014 interest payment. The prime rate for 2014 was 5 percent. Which of the following answers shows the effect of the 2014 interest payment on the financial statements? A) (75) B) (75) (90) D) Assets

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Interest expenses to be recognized as per the given i... View the full answer