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Chapter 9

Q. 9.2

The ABC Company takes a 10 million lei bank loan at a 10% annual interest rate, with equal principal payments in a 4-year period. Provide the specific journal entries and amounts.

Step-by-Step

Verified Solution

The following journal entries and measurements should be disclosed:

ABC Company (the debtor) The Bank (the creditor)
1. Receiving the loan (financial asset at amortised cost)
10 mil lei Bank account = Long-term loan 10 mil
1. Granting the loan (financial liability at amortised cost)
10 mil lei Long-term receivables = Bank
Account 10 mil
2. Payment of the first arrear and interest
1.25 mil lei % = Bank Account 1.25 mil lei
1 mil lei Interest expense
0.25 mil lei L.T. Loan
2. Receipt of the first arrear and interest
1.25 mil lei Bank Account = % 1.25 mil lei
Interest revenue 1 mil lei
L.T. Receivable 0.25 mil lei