Mock 1 Q4b Reflator

This topic has 1 reply, 2 voices, and was last updated 7 years ago by John Moffat.

Viewing 2 posts - 1 through 2 (of 2 total)

Author

Posts
September 4, 2018 at 3:42 pm #471347
richardscully
Participant
- Topics: 197
- Replies: 145
Dear Sir

The answer book in my opinion fails to show this correctly. The 9% subordinated loan requires principle to be paid with the interest. The answer shows the interest then retained earnings of 73. Should not the 39 of the principle on the 300k come off that retained earnings and therefore that amount is not added to equity??
September 5, 2018 at 6:50 am #471494
John Moffat
Keymaster
- Topics: 57
- Replies: 54859
Repayment of a loan does not reduce profits (and therefore retained earnings) – it is only payment of interest that reduces profits.
Author

Posts

Viewing 2 posts - 1 through 2 (of 2 total)

The topic ‘Mock 1 Q4b Reflator’ is closed to new replies.