1. **Stating the problem:** We need to prepare journal entries for a loan granted on January 1, 2022, with principal 150,000, interest 10% payable annually, loan matures in 3 years, direct origination cost incurred, and origination fee received. The effective interest rate is 12% after considering fees and costs. 2. **Identify key values:** - Principal (Face value) = 150,000 - Direct origination cost = ? (not explicitly given, assume 0 for journal entries since only fee and principal given) - Origination fee received = 342,100 (likely a typo or misinterpretation, assuming it means loan amount net of fees, but since it is higher than principal, treat as fee received) - Nominal interest rate = 10% - Effective interest rate = 12% - Loan term = 3 years 3. **Calculate initial loan amount recorded:** Loan receivable = Principal - Origination fee + Direct origination cost Since direct cost is not given, assume 0. Loan receivable = 150,000 - 342,100 = -192,100 (not logical, so assume origination fee is actually a fee paid by borrower increasing loan amount, so loan amount = 150,000 + 342,100 = 492,100) 4. **Journal entries for 2022:** - On Jan 1, 2022 (loan granted): Dr Loan Receivable 492,100 Cr Cash 150,000 Cr Unearned Fee Income 342,100 - On Dec 31, 2022 (interest accrual using effective rate 12%): Interest revenue = 492,100 * 12% = 59,052 Dr Interest Receivable 59,052 Cr Interest Revenue 59,052 5. **Journal entries for 2023:** - On Dec 31, 2023 (interest accrual): Interest revenue = 492,100 * 12% = 59,052 Dr Interest Receivable 59,052 Cr Interest Revenue 59,052 6. **Journal entries for 2024:** - On Dec 31, 2024 (interest accrual and loan maturity): Interest revenue = 492,100 * 12% = 59,052 Dr Interest Receivable 59,052 Cr Interest Revenue 59,052 - On Dec 31, 2024 (loan repayment): Dr Cash 492,100 Cr Loan Receivable 492,100 **Note:** The problem statement has inconsistent data for origination fee and costs. The above assumes origination fee increases loan amount. Adjust accordingly if more data is provided.