Safari Bank granted a loan to a borrower on Jan. 1, 2020. The interest on the loan is 8% payable annually starting Dec. 31,2020. The loan matures in three years on Dec. 31,2022. Data related to the loan are: Principal amount 1,500,000 Origination fees charged against the borrower 50,000 Direct Origination cost incurred 130,150 After consideration of the origination fees charged against the borrower and the direct origination cost incurred, the effective rate on the loan is 6%. Required: 1. Compute the carrying amount of the loan receivable on December 31,2020, December 31,2021, December 31,2022. 2. Prepare a table of amortization for the loan receivable.
Safari Bank granted a loan to a borrower on Jan. 1, 2020. The interest on the loan is 8% payable annually starting Dec. 31,2020. The loan matures in three years on Dec. 31,2022. Data related to the loan are: Principal amount 1,500,000 Origination fees charged against the borrower 50,000 Direct Origination cost incurred 130,150 After consideration of the origination fees charged against the borrower and the direct origination cost incurred, the effective rate on the loan is 6%. Required: 1. Compute the carrying amount of the loan receivable on December 31,2020, December 31,2021, December 31,2022. 2. Prepare a table of amortization for the loan receivable.
Cornerstones of Financial Accounting
4th Edition
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Jay Rich, Jeff Jones
Chapter8: Current And Contingent Liabilities
Section: Chapter Questions
Problem 75APSA: Note Payable and Accrued Interest Fairbome Company borrowed $60,000 on an 8%, interest-bearing note...
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Problem 24
Safari Bank granted a loan to a borrower on Jan. 1, 2020. The interest on the loan is 8% payable annually starting Dec. 31,2020. The loan matures in three years on Dec. 31,2022. Data related
to the loan are:
Principal amount 1,500,000
Origination fees charged against the borrower 50,000
Direct Origination cost incurred 130,150
After consideration of the origination fees charged against the borrower and the direct origination cost incurred, the effective rate on the loan is 6%.
Required:
1. Compute the carrying amount of the loan receivable on December 31,2020, December 31,2021, December 31,2022.
2. Prepare a table of amortization for the loan receivable.
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