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What is the amount of loan extended to MAPCD Co

What is the amount of loan extended to MAPCD Co

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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What is the amount of loan extended to MAPCD Co.
On January 1, 2019. MAEA Co. extended a loan to MAPDC Co. and received a five-year, 10%, 4,000,000 note. The amount extended resulted to a yield rate of 9%. The note calls for annual interest to be paid every December 31. MAEA received the 2019 and 2020 interest on schedule, however, during 2021, MAPDC had been experiencing financial difficulties. On December 31, 2021. MAPDC was not able to pay the interest. MAEA recorded the accrued interest for 2021. MAPDC communicated to MAEA a revised payment scheme due to the recent financial difficulty the entity had experienced. The payment schedule included the following: MAPDC will not be paying the interest anymore ● The principal will be paid in four (4) equal installments starting December 31, 2023 The effective interest rate on December 31, 2021 is 13%.
Transcribed Image Text:On January 1, 2019. MAEA Co. extended a loan to MAPDC Co. and received a five-year, 10%, 4,000,000 note. The amount extended resulted to a yield rate of 9%. The note calls for annual interest to be paid every December 31. MAEA received the 2019 and 2020 interest on schedule, however, during 2021, MAPDC had been experiencing financial difficulties. On December 31, 2021. MAPDC was not able to pay the interest. MAEA recorded the accrued interest for 2021. MAPDC communicated to MAEA a revised payment scheme due to the recent financial difficulty the entity had experienced. The payment schedule included the following: MAPDC will not be paying the interest anymore ● The principal will be paid in four (4) equal installments starting December 31, 2023 The effective interest rate on December 31, 2021 is 13%.
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