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What will be the finance charge in the statement of profit or loss

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What will be the finance charge in the statement of profit or loss

If we are told that $30,000 6% loan note was issued on 31st May, 2013. In the trial balance it shows that $900 loan interest was paid on 30 November, 2013 and that, because of large premium payable on redemption, the effective rate of interest is 8%, what will be the finance charge in the Statement of Profit and Loss for the year ended 31 January, 2014 where the company's cost of capital is 10%?
Source: opentuition.com

November 6th 2014 AN ACCA USER 8,730 Points

3 Replies

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Hi Subash,
I think the the finance charge based on effective rate (8%) and it is 8/1230,0008%=1,600

November 13th 2014 AN ACCA USER 140 Points
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So do we deduct the $900 or we add it to 1,600
November 25th 2014 AN ACCA USER 230 Points
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Ok what would the entries to SFP then
November 25th 2014 AN ACCA USER 150 Points
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