Question At beginning of the year 2020, you have a bank loan and overdraft of $687,000 and the following Assets: Development cost Development $85,000 Land and building $320,000 Plant and Machinery $125,000 Current asset: Inventory $210,000 and Receivables $500,000 Current liability: Payables $393,000 and Revaluation gain on Land and Building is $50,000 Note: In full satisfaction of the GHC687,000 owing, the bank agrees to accept an immediate payment of GHC87,000 and to consolidate the balance of GHC600,000 into a loan, carrying interest of 20% per annum, repayable in year 2020. The loan is to be secured by a fixed charge on the land and buildings and a floating charge on the company's remaining assets. How will you treat this transactions in the balance sheet.
Question
At beginning of the year 2020, you have a bank loan and overdraft of $687,000 and the following Assets:
Development cost Development $85,000
Land and building $320,000
Plant and Machinery $125,000
Current asset: Inventory $210,000 and Receivables $500,000
Current liability: Payables $393,000 and Revaluation gain on Land and Building is $50,000
Note: In full satisfaction of the GHC687,000 owing, the bank agrees to accept an immediate payment of GHC87,000 and to consolidate the balance of GHC600,000 into a loan, carrying interest of 20% per annum, repayable in year 2020. The loan is to be secured by a fixed charge on the land and buildings and a floating charge on the company's remaining assets.
How will you treat this transactions in the
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