International Finance and Accounting Handbook

21 • 30

F. Journal Entries and Balance Sheet

Journal entries

Balance sheetAssets

Liabilities and Equity

__________________________________________

______________________________________

20X0Cash

$

895.00

Cash

$

895.00

Equity

$

1,000.00

Subordinated Interest (AFS)

169.38

Subordinated Interest (AFS)

188.62

Unrealized gain

19.24

Servicing Asset

22.45

Servicing Asset

22.45

Retained earnings

86.82

________________

_______________

Loans

$

1,000.00

$

1,106.07

$

1,106.07

________________

_______________

________________

_______________

Gain from securitization

86.82

To record the sale

Income Statement

Subordinated Interest (AFS)

$

19.24

Unrealized gain

$

19.24

Income

Expense

__________________________________________

______________________________________

Record the SFAS 115 AFS adjustment

Gain from securitization

$

86.82

Other

$

—

Interest Income

—

Servicing Expense

—

Servicing Income

—

________________

_______________

$

86.82

$

—

________________

_______________

________________

_______________

20X1

Balance sheetAssets

Liabilities and Equity

__________________________________________

______________________________________

Cash

$

80.34

Cash

$

995.34

Equity

$

1,000.00

Subordinated Interest (AFS)

$

39.84

Subordinated Interest (AFS)

142.23

Unrealized gain

12.69

Interest Income on Subordinated Interest

40.51

Servicing Asset

15.23

Retained earnings

140.12

________________

_______________

$

1,152.81

$

1,152.81

________________

_______________

________________

_______________

Record accretion on Subordinated Interest and interest received from SPE

Income Statement

Cash

$

20.00

Servicing Expense

7.21

Servicing Income

$

20.00

Servicing Asset

7.21

Amortize Servicing Asset and record the contractual servicing fee

Income

Expense

__________________________________________

______________________________________

Unrealized gain

$

6.56

Subordinated Interest (AFS)

$

6.56

Gain from securitization

$

—

Other

$

—

Interest Income on Subor

40.51

Servicing Expense

7.21

Record the SFAS 115 AFS adjustment

Servicing Income

20.00

________________

_______________

$60.51

$

7.21

________________

_______________

________________

_______________