Yaz Industries has outstanding notes payable with California Bank due in 13 months. In addition, Yaz currently
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Question:
Yaz Industries has outstanding notes payable with California Bank due in 13 months. | |||||
In addition, Yaz currently owes interest on the note. Yaz is in financial difficulty and renegotiates | |||||
to settle the debt. California Bank agrees to accept cash and shares of Yaz stock. | |||||
The stock has a par value of $1 per share and a market value of $35 per share. | |||||
Based on your assigned terms for the settlement, record the entry for Yaz for the restructuring | |||||
of the debt | |||||
Name | Note Payable | Interest due | Cash paid | shares given | |
Gabriel | $ 10,000,000 | $ 450,000 | $ 6,000,000 | 10,000 | |
Sarah | $ 8,000,000 | $ 360,000 | $ 6,000,000 | 8,000 | |
Raul | $ 7,000,000 | $ 350,000 | $ 5,500,000 | 7,000 | |
Jessica | $ 6,000,000 | $ 300,000 | $ 4,500,000 | 15,000 | |
Bujar | $ 1,000,000 | $ 50,000 | $ 800,000 | 1,000 | |
Genesis | $ 12,000,000 | $ 600,000 | $ 9,000,000 | 60,000 | |
Ariana | $ 9,000,000 | $ 540,000 | $ 7,000,000 | 50,000 | |
Belinda | $ 5,500,000 | $ 400,000 | $ 5,000,000 | 10,000 | |
Alan | $ 10,000,000 | $ 325,000 | $ 9,000,000 | 4,000 | |
Michael | $ 12,500,000 | $ 250,000 | $ 7,000,000 | 120,000 | |
Li | $ 11,000,000 | $ 2,000,000 | $ 8,000,000 | 100,000 | |
Lesley | $ 10,000,000 | $ 500,000 | $ 6,000,000 | 80,000 | |
Melissa | $ 4,000,000 | $ 420,000 | $ 850,000 | 50,000 | |
Aldo | $ 12,000,000 | $ 300,000 | $ 9,000,000 | 40,000 | |
Gregory | $ 3,250,000 | $ 250,000 | $ 2,000,000 | 25,000 | |
Alfredo | $ 2,500,000 | $ 250,000 | $ 1,500,000 | 12,000 | |
Solution: | |||||
The fair value paid ($6 million in cash and $3.5 million in stock) | |||||
Notes payable | $ 10,000,000 | ||||
Interest payable | $ 450,000 | ||||
Cash | $ 6,000,000 | ||||
Common stock | $ 100,000 | ||||
Capital in excess of par | $ 3,400,000 | ||||
Gain on settlement of debt | $ 950,000 |
Required
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Related Book For
Intermediate Accounting IFRS
ISBN: 978-1119372936
3rd edition
Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield
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