Cash & Treasury - AAT Test 2

Can anyone show me how to work out the long-term loan please?

The answer is Cr 1,134,000



  • GeorgiaH
    GeorgiaH AAT Student Posts: 107
    @Irrorate Could you maybe help me with this please? :smile:
  • Mike Webster
    Mike Webster Registered, Tutor Posts: 203 Dedicated contributor ? ? ?
    edited June 2017

    Total loan £1,260,000

    Split thus:

    Some of it will be repaid within the next year (Current liability of £126,000)

    Note: I do not agree with the model answer for this part of the task of -£126,000 credit as this means that the liability is being reduced. to me, a liability is a positive figure just on the credit side. After all, you wouldn't debit the bank with +£126 and credit a loan with -£126 would you? I have asked for clarification on this.

    The remainder will be repaid over the next 9 years (Non-current liability - Loan account - of £1,134,000

    £126,000 + £1,134,000 = £1,260,000

    Does this help?

    Michael JH Webster AATQB FMAAT
  • Irrorate
    Irrorate Registered Posts: 139
    As above:
    Dr bank full amount £1,260,000
    Cr current loan a/c £126,000 (10yr loan, £126kpa)
    Cr L/T loan a/c £1,134.000

    Interest is just there to throw you off in this particular question.
  • GeorgiaH
    GeorgiaH AAT Student Posts: 107
    Ohh great thanks very much Mike & @Irrorate :smile:
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