Answer:
Record the necessary entries in the Journal Entry Worksheet below for FirstBanc Corp.
August 01, 2021:
Cash- 20.800.000
Notes Payable- 20.800.000
December 31, 2021:
Interest Expense- 520.000
Interest Payable- 520.000
January 31, 2022:
Notes Payable- 20.800.000
Interest Payable- 520.000
Interest Expense- 104.000
Cash- 21.424.000
Explanation:
August 01, 2021:
Cash- 20.800.000
Notes Payable- 20.800.000
December 31, 2021:
Interest Expense- 520.000
Interest Payable- 520.000
January 31, 2022:
Notes Payable- 20.800.000
Interest Payable- 520.000
Interest Expense- 104.000
Cash- 21.424.000
Explanation:
We have to note an important point here is that, Smith has plan to sell fraudulent identification card through Jones and he has done only Oral agreement.
An oral agreement does not have a proof. Any oral agreement cannot be taken as a proof legally. There must be a proper written agreement required to prove the relationship. There are certain standard too in written agreement.
For Example, agreement written on a normal white paper cannot be accepted. The agreement should be legally signed according the bond paper provided and authorized by the Government.
Considering all the above discussion, Jones stands right.
Explanation:
The bank runs the danger that just before the second year, the short-term interest rate will increase, increasing its Lending value, but leaving untouched the interest income the bank gets from either the Treasury bill.
Annual interest revenue of 0.04* $50 million= 2 million and annual interest costs for the bank (0.02)* $50 million= 1 million, between 2 per cent to 4 per cent for the Treasury note.
The bank makes a profit of $2 million – $1 million = $1 million. If the interest rate rises 1 percent, the bank’s profit falls to
((0.04)* $50 million) – ((0.03) * $50 million) = $500,000.
