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 |