Strax co received a loan of 36,000 $ on 1 April 2016 from Tega co. The...

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Strax co received a loan of 36,000 $ on 1 April 2016 from Tega co. The...

Strax co received a loan of 36,000 $ on 1 April 2016 from Tega co. The bond was for one year and bore 7% interest. Strax co had $ 1,700 cash sales in 2016 and $ 1,400 in 2017. Suppose no other transactions have occurred in this example.

What were the liabilities in the accounts of Strax co in 2016 and 2017?

a 36,000 $ / 630 $.
b 37.890 $. / 0 $.
c 37,890 $. / 38.520 $.
d 38,520 $ / 0 $.

business accounting

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Answer 1

Answer #1

OPTION C: 37,890 $ / 38.520 $

EXPLANATION:

In 2016:

the liability towards loan principal = $36000

the liability towards loan interest = $36000 x 7% x (9/12) = $1890

therefore total liability = $37890

In 2017:

the liability towards loan principal = $36000

the liability towards loan interest = $36000 x 7% = $2520

therefore total liability = $38520

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Answer 2

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