Entry to record the issuance of the loan

Reference no: EM131051097

(Impairments) On December 31, 2014, Iva Majoli Company borrowed $62,092 from Paris Bank, signing a 5-year, $100,000 zero-interest-bearing note. The note was issued to yield 10% interest. Unfortunately, during 2016, Majoli began to experience financial difficulty. As a result, at December 31, 2016, Paris Bank determined that it was probable that it would receive back only $75,000 at maturity. The market rate of interest on loans of this nature is now 11%.

Instructions

(a) Prepare the entry to record the issuance of the loan by Paris Bank on December 31, 2014.

(b) Prepare the entry, if any, to record the impairment of the loan on December 31, 2016, by Paris Bank.

Reference no: EM131051097

Questions Cloud

What is the inflation rate : Suppose the money supply grows at a constant rate of 4%/year. What is the inflation rate? What's the nominal interest rate? What would be different if money growth were higher or lower (say, 2% or 10%)?

What is the internal rate of return for this investment : An apartment building in your neighborhood is for sale for $140,000. The building has four units, which are rented at $500 per month each. The tenants have long-term leases that expire in 5 years. Maintenance other expenses for care and upkeep are $8..

Interest on company-issued bonds : Why can the distinction between fixed costs and variable costs be made in the short run? Classify the following as fixed or variable costs: advertising expenditures, fuel,

Estimates produced by the two production lines : The Dutch Girl paint factory uses process costing in their plant to calculate monthly profit and loss for the two production lines producing house paint. Manager bonuses are based upon performance against goals set by the division's top management. W..

Entry to record the issuance of the loan : (Impairments) On December 31, 2014, Iva Majoli Company borrowed $62,092 from Paris Bank, signing a 5-year, $100,000 zero-interest-bearing note. The note was issued to yield 10% interest.

Permanent shift in the level : Consider a one-time increase in the money stock by 3% relative to trend. Money supply initially grows at a constant rate of 2% per year. For one year, the money stock grows by 5% instead of 2%, and then returns to 2% growth.

Advantage of an indexed equity mutual fund : Which of the following is an advantage of an indexed equity mutual fund relative to a managed equity fund? a. Indexed funds generally have better stock pickers.

Calculate the average product of labour : Suppose capital is fixed at 16 units. If the firm can sell its output at a price of $100 per unit and can hire labor at $25 per unit, how many units of labor should the firm hire in order to maximize profits?

Prepare the journal entry to record the reimbursement : (Petty Cash) The petty cash fund of Fonzarelli's Auto Repair Service, a sole proprietorship, contains the following.

User Account

All Pages