The accounting records of Xyz
shows the following accounts as of January 1, 2012.
Prepaid rent 40,000, Supplies, 6,000 Prepaid
insurance, 2,000 Equipment .80, 000, Building 70,
000 A/P .12, 000 N/P. 9,000.Assume that the
company wants to introduce a new product with
the required capital of birr 360,000. The company
applied for credit at Addis international bank
Share Company in order to finance the required
capital. The bank accepted application and agreed
with 12% interest semiannually with equal
installment semi-annually for five years. The bank
charged birr 2500 for facilitating the loan. The
company estimates a profit of Br 90,000.
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