Nasty Bank granted a loan to a borrower on January 1,2020. The interest on the loan is 10% payable annually starting December 31, 2020 The loan matures in three years on December 31, 2022 Principal amount 4,000,000 Direct origination cost incurred 150,000 Origination fee charged against the borrower 342,100 After considering the origination fee charged against the borrower and the direct origination cost incurred, the effective rate on the loan is 12%. Required: Prepare journal entries for 2020, 2021 and 2022.
Nasty Bank granted a loan to a borrower on January 1,2020. The interest on the loan is 10% payable annually starting December 31, 2020 The loan matures in three years on December 31, 2022 Principal amount 4,000,000 Direct origination cost incurred 150,000 Origination fee charged against the borrower 342,100 After considering the origination fee charged against the borrower and the direct origination cost incurred, the effective rate on the loan is 12%. Required: Prepare journal entries for 2020, 2021 and 2022.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Nasty Bank granted a loan to a borrower on January 1,2020. The interest on the loan is 10% payable annually starting December 31, 2020 The loan matures in three years on December 31, 2022
Principal amount 4,000,000
Direct origination cost incurred 150,000
Origination fee charged against the borrower 342,100
After considering the origination fee charged against the borrower and the direct origination cost incurred, the effective rate on the loan is 12%.
Required:
Prepare journal entries for 2020, 2021 and 2022.
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