Problem: Review the Interest Expense activity and Line of Credit (LOC) transactions (direct extraction, summarization).
Background on RFMH's LOC : In December of 2018, RFMH exercised its $209,000 line of credit to build a new showroom in early 2019. The bank charges 0.25% of the amount borrowed against the LOC (in this case, $527.10), which was rolled into the loan balance. RFMH paid down the outstanding balance during September and October of 2019. The fed funds effective rate at the end of 2019 was 1.75%, and it had dropped to 0.25% by first quarter 2020.
Determine the average rate being paid on the company's line of credit for the last quarter of 2019.
Does it appear to be reasonable/consistent with current rates?