On December 1, year 1, Frick Co. gave Frack co. a $200,000, 11% loan. Frick paid proceeds of $194,000 after the deduction of a nonrefundable loan origination fee of $6,000. P&I are due in 60 monthly installments of $4310 beginning 1/1/y2. The repayments yield an effective interest rate of 11% at a present value of $200,000 and 12.4% at a present value of $194,000. What amount of expense from this loan should be reported on the year 1 income statement? Prepare Frick's general journal entry for year 1 related to all expenses and revenue for the loan.
Interest will be due on total amount of loan 200000 at 11 % per annum For year 1, Interest will be due for 1 month of... View the full answer