Loob Company had the following loans at 12% interest payable at maturity. The entity repaid each loan on scheduled maturity date. Maturity date 10/31/2021 7/31/2021 1/31/2022 Date Amount Term 11/1/2020 2/1/2021 5/1/2021 500,000 1,500,000 800,000 1 year 6 months 9 months The entity recorded interest expense when the loans are repaid. As a result interest expense of P150,000 was recorded in 2021.
Loob Company had the following loans at 12% interest payable at maturity. The entity repaid each loan on scheduled maturity date. Maturity date 10/31/2021 7/31/2021 1/31/2022 Date Amount Term 11/1/2020 2/1/2021 5/1/2021 500,000 1,500,000 800,000 1 year 6 months 9 months The entity recorded interest expense when the loans are repaid. As a result interest expense of P150,000 was recorded in 2021.
Chapter9: Accounting For Receivables
Section: Chapter Questions
Problem 21MC: A customer takes out a loan of $130,000 on January 1, with a maturity date of 36 months, and an...
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a. What amount should be reported as interest expense for 2021?
b. If no correction is made, by what amount would interest expense for 2021 be understated?
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