Problem 8-2 (ACP)
2021
Idealist company secured a 1 year bank loan of 4000000 on october 1, 2014.
The loan was discounted at 10%.
The entity signed a note for the loan and pledged 5000000 of its accounts
receivable as collateral for the same. The accounting period of the entity ends
on december 31 , 2021
Required:
1. Prepare journal entries including adjustment from the date of loan up to
date of maturity.
2. Statement presentation of the bank loan with adequate disclosure on
december 31, 2021
Solution:
Requirement #1
Cash
3,600,000
Discounts on Notes Payable
400,000
Notes Payable - Bank Loan
Interest Expense
100,000
Discount on Notes Payable
100,000
Requirement #2
Note Payable- Bank
Less: Discount Note Payable
Carrying Amount
4,000,000
(300,000)
3,700,000
4,000,000