What is the correct interest income

Assignment Help Accounting Basics

Reference no: EM133612113

Question: In your audit of New Brunswick Inc., loans receivables you have ascertained the following information in one of its outstanding loans receivable balances. Balance per records, 12/31/16 P6,000,000 Interest income 480,000 Your investigation revealed the following information: The loan was originated on January 1, 2016 and shall be collected 3 years later. The company incurred total origination costs amounting to P520,600, P200,000 of which was charged to the debtor. The entry made by New Brunswick was to debit Loans Receivable account at the face value of the security charging an operating expense for the net origination costs incurred. Annual interests on the loan was collected at the end of 2016 and 2017 and were appropriately credited to interest income. The yield rate on the loan when it was originated was 6% while the prevailing effective interest rate on similar loan by the end of 2017 was 9%. What is the correct interest income?

Reference no: EM133612113

Questions Cloud

How would you resolve the conflict : You are a small, online retail company trying to set up the ability to have credit card payments from customers. How would you resolve this conflict?

Expense on the income statement : Accumulated amortization when it reduces the Right-of-use asset. amortizes the the Right-of-use asset using its normal depreciation policies

On what grounds could the landlord bring a legal action : On what grounds could the landlord bring a legal action against Arshpreet Kaur for the $4,500.00 arrears owed by the previous tenant?

Time establishing effective communication : Assuming that one of major changes in designing throughputs is that clients and counselor will significant amount of time establishing effective communication

What is the correct interest income : while the prevailing effective interest rate on similar loan by the end of 2017 was 9%. What is the correct interest income

What is the name of your charity : What is the name of your charity? What type of event will you be planning? How will your event generate revenue for your charity? Give a rough draft of a cost

Does higher return online justify reduction in retail sales : dominated by customers wanting to try instruments. Does a higher return online justify a reduction in retail sales? Certainly not at this point.

What acculturation strategy is destiny using : Destiny is a 13-year-old American female who is immigrating to the United Kingdom. What acculturation strategy is Destiny using?

Conduct a legislative committee : The hearing must be conducted by a legislative committee and contain at least 2 witnesses called to testify.

User Account

All Pages