A South African paper company, SAPC Limited (SAPC), reports noncurrent Interest-Bearing Borrowings of $1,634 million at September 30, Year 6. SAPC applies IFRS and reports its results in millions of U.S. dollars. At September 30, Year 7, this balance had increased to $1,828 million. Assume that on March 30, Year 7, SAPC borrowed $1,200 million from a local bank. The loan bears interest at an annual rate of 7.5% and is due on March 31, Year 9. Assume also that SAPC makes its interest payments once per year on the last day of March. SAPC’s fiscal year begins October 1 and ends on September 30. The firm closes its books on September 30 of each year.
a. What journal entry did SAPC record for the repayment of debt during the fiscal year ending September 30, Year 7?
b. Present the journal entries that SAPC Limited made in fiscal years ending September
30, Year 7, Year 8, and Year 9, related to the bank loan obtained on March 30, Year 7.