3,000,000 Direct origination cost incurred                                  260,300 Origination fee charged against the borrower     100,000 After considering the origination fee charged to the borrower and the direct origination cost incurred, the effective rate on the loan is 6%. Required: 1. Prepare journal entries for 2020, 2021 and 2022. 2. Present the loan receivable o

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A:

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A:

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Q: for the interest income for 2020

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A:

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A: Carrying or book value is the worth of the asset or any debt when it is purchased.

Q: current liabilities section

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A: Accounts to be closed : Sales revenue = $ 20000 Interest expense = $ 805 Insurance expense / Lawsuit…

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A: Origination  fees will not form part of loan receivable

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A: Interest Income - It is the amount of money paid by the borrower over and above the loan amount to…

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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.