On July 1, 2016, the Southwest Forging Corporation arranged for a line of credit with the First National Bank (FNB) of Dallas. The terms of the agreement call for a $120 comma 000 maximum loan with interest set at 1 percent over prime. In addition, the firm has to maintain a 21 percent compensating balance in its demand deposit account throughout the year. The prime rate is currently 3 percent (assume a 360-day year). a. If Southwest normally maintains a $25 comma 200 to $37 comma 200 balance in its checking account with FNB of Dallas, what is the annualized cost of credit through the line-of-credit agreement when the maximum loan amount is used for a full year? b. Recompute the annualized cost of credit to Southwest if the firm borrows the compensating balance and also borrows the maximum possible under the loan agreement. Again, assume the full amount of the loan is outstanding for a whole year.

Required information lansing company’s 2017 income statement and selected balance sheet data (for current assets and current liabilities) at december 31, 2016 and 2017, follow. lansing company income statement for year ended december 31, 2017 sales revenue $130,200 expenses cost of goods sold 53,000 depreciation expense 17,500 salaries expense 29,000 rent expense 10,100 insurance expense 4,900 interest expense 4,700 utilities expense 3,900 net income $7,100 lansing company selected balance sheet accounts at december 31 2017 2016 accounts receivable $6,700 $8,000 inventory 3,080 2,090 accounts payable 5,500 6,800 salaries payable 1,100 810 utilities payable 440 270 prepaid insurance 370 500 prepaid rent 440 290 required: prepare the cash flows from operating activities section only of the company’s 2017 statement of cash flows using the indirect method. (amounts to be deducted should be indicated with a minus sign.)