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Journaling unusual transactions
How would you journal an entry, if company A which is just starting,ask company B to help finance their business. Company B agrees to provide financing, only if Company A sales only their product and the loan will be repaid in 12 annual installment at an interest rate of 5% per year?
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Let's say the loan is for 100,000.
When you get the loan, let's say Jan 1…. Dr. Cash 100,000 Cr. Loan Payable 100,000 When you make the payment each month. Dr. Interest Expense Dr. Loan Payable Cr. Cash As for agreeing to sell only Company B's products….you would disclose that in the notes to your financial statements. |
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