On December 31, 2010, Central Bank agrees to a restructuring of a 12% note with a $200,000

Question:

On December 31, 2010, Central Bank agrees to a restructuring of a 12% note with a $200,000 face value and $60,000 of accrued interest owed to the bank by Carter Company. The bank agrees to forgive the accrued interest, extend the maturity date to December 31, 2013, and reduce the annual interest rate to 6%. Carter Company paid the interest due on December 31, 2011.

Required

1. Prepare the journal entry for Central Bank to record the restructuring of the note on December 31, 2010.

2. Prepare the journal entry for Central Bank to record the receipt of the interest on December 31, 2011.

Face Value
Face value is a financial term used to describe the nominal or dollar value of a security, as stated by its issuer. For stocks, the face value is the original cost of the stock, as listed on the certificate. For bonds, it is the amount paid to the... Maturity
Maturity is the date on which the life of a transaction or financial instrument ends, after which it must either be renewed, or it will cease to exist. The term is commonly used for deposits, foreign exchange spot, and forward transactions, interest...