ABC Bank granted a loan to a borrower on Jan. 1, 2019. The interest on the loan is 10% payable annually starting Dec. 31,2019. The loan matures in five years on Dec. 31,2023. The data related to the loan are: Principal amount 8,000,000 Origination fees received 700,000 Direct Origination cost incurred 123,000 The effective rate on the loan after considering the direct origination cost and the origination fee received is 12%. 1.What is the entry to record the receipt of the interest income on December 31, 2019? 2.What is the interest income for 2019?
ABC Bank granted a loan to a borrower on Jan. 1, 2019. The interest on the loan is 10% payable annually starting Dec. 31,2019. The loan matures in five years on Dec. 31,2023. The data related to the loan are: Principal amount 8,000,000 Origination fees received 700,000 Direct Origination cost incurred 123,000 The effective rate on the loan after considering the direct origination cost and the origination fee received is 12%. 1.What is the entry to record the receipt of the interest income on December 31, 2019? 2.What is the interest income for 2019?
Chapter5: Introduction To Business Expenses
Section: Chapter Questions
Problem 61P
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ABC Bank granted a loan to a borrower on Jan. 1, 2019. The interest on the loan is 10% payable annually starting Dec. 31,2019. The loan matures in five years on Dec. 31,2023. The data related to the loan are:
Principal amount 8,000,000
Origination fees received 700,000
Direct Origination cost incurred 123,000
The effective rate on the loan after considering the direct origination cost and the origination
fee received is 12%.
1.What is the entry to record the receipt of the interest income on December 31, 2019?
2.What is the interest income for 2019?
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