In 2014, Congress established a small business direct loan program. The program provides that qualifying businesses can
Question:
In 2015, the Small Business Administration, which administers the program, loaned the S & D Produce Company $100,000 for 10 years at a rate of 5 percent. At the time, the prevailing Treasury rate was 10 percent. The loan was to be repaid in ten annual installments of $12,950.
1. What journal entry should the Small Business Administration make in 2014 when Congress authorized the program? Explain and justify your response.
2. What journal entry should it make in 2015 when it loaned the S & D Produce Company $100,000? Explain and justify your response.
3. What journal entries should it make in 2016 and 2017 upon collection of the first two loan repayments?
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Related Book For
Government and Not for Profit Accounting Concepts and Practices
ISBN: 978-1118155974
6th edition
Authors: Michael H. Granof, Saleha B. Khumawala
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