Receive a loan: Financial events series, part 4 of 29
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Jean vists the bank and applies for a loan. TechnolOntario receives a $50,000 loan from the bank at an annual interest rate of 6%. The interest on the outstanding amount is due every year on the anniversary, and the principal can be repaid at any time.
The journal entry would record this event as a $50,000 debit for cash assets and a $50,000 credit for a bank loan liability.
The financial statements would read:
Information on this series
To demonstrate how various business transactions and other economic events impact the financial statements, this series tracks the accounts of the first fiscal year of a fictional start-up company called TechnolOntario, Inc. Common financial events are introduced and recorded one by one, and they accumulate on the financial statements as TechnolOntario’s fiscal year progresses.
Note that together these examples form a series of 29 articles. Check our complete list of accounting examples to specifically select which ones you’d like to see. Or you can follow the series from start to finish. This article is part 4 of 29.
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References
Markle, K. (2004, August). Introduction to Accounting. Presentation delivered at Schulich School of Business, York University, Toronto, Canada.
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