ABC Bank granted a loan to a borrower on Jan. 1, 2019. The interest on the loan is 10% payable annually starting Dec. 31,2019. The loan matures in five years on Dec. 31,2023. The data related to the loan are: Principal amount 8,000,000 Origination fees received 700,000 Direct Origination cost incurred 123,000 The effective rate on the loan after considering the direct origination cost and the origination fee received is 12%. 1.What is the entry to record the receipt of the interest income on December 31, 2019?

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A: Interest income is the sum of money given by an organization which has raise money in any sort of…

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A: Solution Carrying amount is the cost of an asset less accumulated depreciation.

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A: An amortizing loan is a regular type of installment loan where the regular monthly payment is done…

Q: for the interest income for 2020

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A: Interest Payable on December 31, 2020 = Amount borrowed x rate of interest x no. of months /12 =…

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Q: What amount of the payment made on January 1, 2022 will be interest expense?

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Q: Awesome Bank granted a loan to a borrower on January 1, 2019. The interest rate on the loan is 10%…

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A:

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A:

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A:

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Q: How much interest expense should be accrued

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A: Formula: Interest expense = Loan Amount x Interest rate x Time period

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Cost of Credit

The cost of credit is an extra amount that the borrower has to pay besides the loan amount. These credit charges may vary from loan to loan. The cost of credit includes interest charges, maintenance charges, and arrangement charges. Some of the costs are mandatorily collected by the lender based on the loan amount and tenure of the loan. The cost of credit is also called finance charges of the credit.