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Good day Mr Mike,
Why didn´t we deduct the interest of the issued loan note from Retained Earnings of Paradigm and add it to the Loan notes account?
My answer was:
Ret Ears of 33,975 instead of 34,000 because I deducted the 75 interest
Loan notes of 9,575 (8,000+1,500+75)The 75 is 1500×10%x6/12
How can they not record the debt and record the relating interest?
Am I not correct – wasn’t the loan interest paid an correctly recorded?
Dr Expense, Cr Cash
So therefore the expense is already reflected in the retained earnings figure.
(I may be wrong – that answer was from memory!)
Hmmm, interesting! I can only assume that the interest has already been correctly accounted for within the Paradigm figures in the question.
Strange, though, that I’ve never noticed this before? How did I deal with it in my recording of the revision lectures?
I haven´t watched the revision lectures. I wanted to try all exams from 2015 to 2010 by myself first and then will watch the revision.
I´ll check today and will let you know.
Hi Mr Mike,
In the revision interest has been ignored.
And so it was in the correction from ACCA.Then I’m back to my earlier comment – I must have assumed that the interest has already been accounted for!
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