Determine the amount of interest expense on this loan

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Question - ZAC Ltd. borrowed $1,200,000 from its bank on January 1, 20X1. The loan requires fixed annual payments (includes both interests at 6% and principal) for $120,000 on January 1 of each year starting on January 1, 20X2.

Required -

1. Determine the amount of interest expense on this loan that the company will report in its income statement for the year ending December 31, 20X1.

2. Determine the balance that the company will report for the current liability portion of the bank loan on December 31, 20X1.

3. Assume that loan payments were required one day earlier, and the first payment was made by the company on December 31, 20X1. In this case, what balance would the company report in its December 31, 20X1 statement of financial position for the current portion of the bank loan payable?

Reference no: EM132869876

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