Question

In: Accounting

On January 1, 2020, Empress Bank granted a loan to a borrower. The interest on the...

On January 1, 2020, Empress Bank granted a loan to a borrower. The interest on the loan is 10% payable annually starting on December 31, 2019. The loan matures in three years on December 31, 2022.

Principal amount

5,000,000

Direct origination cost incurred

457,500

Origination fee charged against the borrower

200,000

After considering the origination fee charged against the borrower and the direct origination cost incurred, the effective rate on the loan is 8%.

Determine the carrying amount of the loan on January 1, 2020. Use comma to separate figures.

For the following journal entries, do not compound entries. Use comma to separate figures.

Prepare journal entries for January 1, 2020.

Prepare journal entry for receipt of interest on December 31, 2020.

Prepare journal entry for amortization of direct origination cost in 2021. (One entry for interest and one entry for amortization. Do not compound entries.)

Prepare journal entry for receipt of payment of loan in 2022.

Solutions

Expert Solution

.....................................................................xxxxxxxxxx...........................................................

PLEASE - - - - PLEASE KINDLY UP-VOTE. IT HELPS ME A LOT. THANK YOU IN ADVANCE.

ekkarill92 answered 1 year ago
Next > < Previous

Related Solutions

On January 1, 2020, Empress Bank granted a loan to a borrower. The interest on the...
On January 1, 2020, Empress Bank granted a loan to a borrower. The interest on the loan is 10% payable annually starting on December 31, 2019. The loan matures in three years on December 31, 2022. Principal amount 5,000,000 Direct origination cost incurred 457,500 Origination fee charged against the borrower 200,000 After considering the origination fee charged against the borrower and the direct origination cost incurred, the effective rate on the loan is 8%. Determine the carrying amount of the...
Solid bank loan P5 million to a borrower on January 1, 2018. The terms of the...
Solid bank loan P5 million to a borrower on January 1, 2018. The terms of the loan require principal payments of P1 million each year for five years plus interest at 8%. The first principal and interest payment is due on January 1, 2019. The borrower made the required payments during 2019 and 2020. However, during 2020 the borrower began to experience financial difficulties, requiring the bank to reassess the collectibility of the loan. On December 31, 2020, the bank...
On January 1, 2020, ABC Company borrowed $200,000 from the bank. The loan is a 10-year...
On January 1, 2020, ABC Company borrowed $200,000 from the bank. The loan is a 10-year note payable that requires semi-annual payments of $24,000 every June 30 and December 31, beginning June 30, 2020. Assume the loan has a 20% interest rate, compounded semi-annually. Calculate the amount of the note payable at December 31, 2020 that would be classified as a long-term liability.
A borrower is offered a mortgage loan for $100,000 with an interest rate of 10% and...
A borrower is offered a mortgage loan for $100,000 with an interest rate of 10% and a 30-year amortization period with monthly payments. The origination fee is 1% of the loan and the lender charges two discount points. What is the effective interest rate? 10%, 9%, 10.37%, or 10.24%?
1. A borrower can obtain an 80 percent loan with an 8 percent interest rate and...
1. A borrower can obtain an 80 percent loan with an 8 percent interest rate and monthly payments. The loan is to be fully amortized over 25 years. Alternatively, he could obtain a 90 percent loan at an 8.5 percent with the same loan term. The borrower plans to own the property for the entire loan term. a. What is the incremental cost of borrowing the additional funds? (Hint the dollar amount of the loan does not affect the answer)....
A borrower borrows on a five year loan $5,000 from a bank at 10% and will...
A borrower borrows on a five year loan $5,000 from a bank at 10% and will pay back the loan in ten equal $ payments (semi-annually) at the end of each time period. How much is each equal payment, how much principal and interest is paid back, and how much interest is paid back?
A borrower and lender agree that a 9,000,000 loan made at 12% interest for 30years will...
A borrower and lender agree that a 9,000,000 loan made at 12% interest for 30years will have a 600,000 balance on the maturity date if the loan will be on constant amortization mortgage (CAM) terms. Determine how much will be paid monthly and prepare a loan payment schedule for the first 4 months.
The borrower is in a $238,000 loan makes interest payments at the end of each six...
The borrower is in a $238,000 loan makes interest payments at the end of each six months for eight years. These are computed using an annual effective discount rate of 6.5%. Each time he makes an interest payment, the borrower also makes a deposit into a sinking fund earning a nominal interest rate of 4.2% convertible monthly. The amount of each sinking und deposit is D in the first three years and 2D in the remaning five years, and the...
Suppose in the month of June your bank granted a business a $5,000 loan with principal...
Suppose in the month of June your bank granted a business a $5,000 loan with principal plus interest (calculated at 12% per year) due to be repaid in 6 months. The transactions that business occurred during that month of operation were as follows: - On June 1st, signed a 2-year contract to lease a food truck for $200 per month, with the first two months paid up front. - On June 1st, purchased a freezer for $2,400 in cash with...
In this normal form game, the players are a borrower and a bank. borrower \ bank...
In this normal form game, the players are a borrower and a bank. borrower \ bank [] lend at 5% [] not lend pay back [] 15,5 [] 0,0 default [] 120, -100 [] 0,0 The bank can lend at 5% or not lend, in which case neither is any better or worse off. If the bank lends, the borrower uses the money to get a benefit worth $120, and chooses between paying back $105 (for a net payoff of...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT