On September 30, 2021, Coronado Corporation received a three-year, 12%, $1,750,000 bank loan. The terms provide for payment ofthe bank loan with quarterly instalment payments of $175,809, starting on December 31. Coronado has a November 30 year end andrecords adjusting entries annually. Record the first two instalment payments, on December 31, 2021, and March 31, 2022. (Round answers to the nearest wholedollar, e.g. 5,250. Credit account titles are automatically indented when the amount is entered. Do not indent manually.List all debit entries before credit entries.)DateAccount Titles and ExplanationDebitCreditDec. 31,Interest Payable34,0002021Interest ExpenseBank Loan Payable175,809Cash1,802,500Mar. 31,Interest Expense52742022Bank Loan Payable165,261Cash170,535

On September 30, 2021, Coronado Corporation received a three-year, 12%, $1,750,000 bank loan. The terms provide for payment of the bank loan with quarterly instalment payments of $175,809, starting on December 31. Coronado has a November 30 year end and records adjusting entries annually.

On September 30, 2021, Coronado Corporation received a three-year, 12%, $1,750,000 bank loan. The terms provide for payment of the bank loan with quarterly instalment payments of $175,809, starting on December 31. Coronado has a November 30 year end and records adjusting entries annually.

CONCEPTS IN FED.TAX.,2020-W/ACCESS

20th Edition

ISBN:9780357110362

Author:Murphy

Publisher:Murphy

Chapter5: Introduction To Business Expenses

Section: Chapter Questions

Problem 61P

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Concept explainers

Cost of Credit

The cost of credit is an extra amount that the borrower has to pay besides the loan amount. These credit charges may vary from loan to loan. The cost of credit includes interest charges, maintenance charges, and arrangement charges. Some of the costs are mandatorily collected by the lender based on the loan amount and tenure of the loan. The cost of credit is also called finance charges of the credit.

Question

On September 30, 2021, Coronado Corporation received a three-year, 12%, $1,750,000 bank loan. The terms provide for payment of
the bank loan with quarterly instalment payments of $175,809, starting on December 31. Coronado has a November 30 year end and
records adjusting entries annually.

Record the first two instalment payments, on December 31, 2021, and March 31, 2022. (Round answers to the nearest whole
dollar, e.g. 5,250. Credit account titles are automatically indented when the amount is entered. Do not indent manually.
List all debit entries before credit entries.)
Date
Account Titles and Explanation
Debit
Credit
Dec. 31,
Interest Payable
34,000
2021
Interest Expense
Bank Loan Payable
175,809
Cash
1,802,500
Mar. 31,
Interest Expense
5274
2022
Bank Loan Payable
165,261
Cash
170,535

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