On 1 January 2010, Company A lends Company B the sum of $10,000 payable in 10 six-monthly instalments of $1,200 each. On 30 June 2012, after receiving payment of instalment No. 5, only 60 per cent of the amount of each remaining instalment will be received, as Company B has financial problems. If after paying instalment No. 7 on 30 June 2013, the debtor announces that it will pay instalments 8, 9 and 10 as originally due ($1,200 committed) and will also pay on 30 June 2015 the remaining $960 owed on instalments No. 6 and No. 7 (the 40% it did not pay). It is requested: a) Determine the IRR of the loan b) Make the accounting entries of the initial recognition for both companies, ‘A’ and ‘B’. c) Draw up the amortisation table in an EXCEL spreadsheet for Company ‘A’ at the time of the loan. d) Make the accounting entries as at 30 June 2012 and 30 June 2013. e) Make the accounting entry to be recognised on 30 June 2015 when Company ‘B’ pays what was announced. (f) Make all necessary amortisation tables in EXCEL spreadsheet for each change in the loan.
On 1 January 2010, Company A lends Company B the sum of $10,000 payable in 10 six-monthly instalments of $1,200 each. On 30 June 2012, after receiving payment of instalment No. 5, only 60 per cent of the amount of each remaining instalment will be received, as Company B has financial problems.
If after paying instalment No. 7 on 30 June 2013, the debtor announces that it will pay instalments 8, 9 and 10 as originally due ($1,200 committed) and will also pay on 30 June 2015 the remaining $960 owed on instalments No. 6 and No. 7 (the 40% it did not pay).
It is requested:
a) Determine the IRR of the loan
b) Make the accounting entries of the initial recognition for both companies, ‘A’ and ‘B’.
c) Draw up the amortisation table in an EXCEL spreadsheet for Company ‘A’ at the time of the loan.
d) Make the accounting entries as at 30 June 2012 and 30 June 2013.
e) Make the accounting entry to be recognised on 30 June 2015 when Company ‘B’ pays what was announced.
(f) Make all necessary amortisation tables in EXCEL spreadsheet for each change in the loan.
Step by step
Solved in 2 steps
