Wheaton Rubber Co. (WR), uses IFRS, is a supplier of tire rubber and among its customers is Tyre Distributors Corp. WR had successfully re-financed a bank note and the re-financing was considered a major restructure. WR provides you with the details concerning the re-financed loan:

- Date of restructure- January 1, 2021

- Market I nterest rate 4%

- Coupon rate of new note 3%

- Interest payable on new note every December 31.

- Note payable- new $515,000 (discounted using market rate)

- Note payable-new $500,000 (discounted using 4.5% coupon rate on old note)

Maturity value of new note $600,000

WR would like to know what the journal entry would be to record the interest payment on December 31, 2021.

Select one:

a.

(dr) interest expense $20,000; (cr) cash $18,000; (cr) note payable $2,000.

b.

(dr) interest expense $18,000; (cr) cash $18,000.

c.

(dr)interest expense $15,450; (dr) note payable $2,550; (cr) cash $18,000.

d.

(dr) interest expense $20,600; (cr) cash $18,000; (cr) note payable $2,600.

e.None of the above.

Wheaton Rubbers bank, which uses IFRS, would prepare the following journal entry on December 31, 2021 when it receives the interest payment from WR on the new note:

Select one:

a.

(dr) cash $18,000; (dr) note receivable $4,500; (cr) interest revenue $22,500.

b.

(dr) cash $18,000; (dr) note receivable $2,600; (cr) interest revenue $20,600.

c.

(dr) cash $18,000; (dr) note receivable $9,000; (cr) interest revenue $27,000.

d.

(dr) cash $18,000; (cr) interest revenue $18,000.

e.

None of the above.