SOS On 1 January 2017, Devin obtained a bank loan of $500 000 from ABC Bank. The loan is to be paid equally over ten years. The first payment, together with the interest, will be made on 31 December 2018. The interest incurred for the year ended 31 December 2018 is $15 000. REQUIRED (a) Prepare journal entries to record the borrowing on 1 January 2017, the interest expense and the first payment on 31 December 2018, including the closing entry. Narrations are required. (b) Prepare an extract of the statement of financial performance for the year ended 31 December 2018, showing only the expense section. (c) Prepare an extract of the statement of financial position as at 31 December 2018, showing only the liabilities section.
SOS On 1 January 2017, Devin obtained a bank loan of $500 000 from ABC Bank. The loan is to be paid equally over ten years. The first payment, together with the interest, will be made on 31 December 2018. The interest incurred for the year ended 31 December 2018 is $15 000. REQUIRED (a) Prepare journal entries to record the borrowing on 1 January 2017, the interest expense and the first payment on 31 December 2018, including the closing entry. Narrations are required. (b) Prepare an extract of the statement of financial performance for the year ended 31 December 2018, showing only the expense section. (c) Prepare an extract of the statement of financial position as at 31 December 2018, showing only the liabilities section.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:On 1 January 2017, Devin obtained a bank loan of $500 000 from ABC Bank. The
loan is to be paid equally over ten years. The first payment, together with the
interest, will be made on 31 December 2018. The interest incurred for the
year ended 31 December 2018 is $15 000.
REQUIRED
(a) Prepare journal entries to record the borrowing on 1 January 2017, the
interest
expense and the first payment on 31 December 2018, including
the closing entry. Narrations are required.
1121
(b) Prepare an extract of the statement of financial performance for the year
ended 31 December 2018, showing only the expense section.
(c) Prepare an extract of the statement of financial position as at
31 December 2018, showing only the liabilities section.
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