Release of the balance sheet for the after the note issue

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Reference no: EM1312596

Release of the balance sheet for the after the note issue and interest payments.

On July 1, 2007, Leach Company needs exactly $103,200 in cash to pay an existing obligation. Leach has decided to borrow from State Bank, which charges 14% interest on loans. The loan will be due in one year. Leach is unsure, however, whether to ask the bank for a) an interest-baring loan with interest and principle payable at the end of the year or b) a loan due in one year but with interest deducted in advance.
Prepare the appropriate balance sheet presentation for July 1, 2007, immediately after the note has been issued, assuming that

a. Interest is paid when the loan is due

b. Interest is deducted in advance

Reference no: EM1312596

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