Question: (L06) (Term Modification with GainCreditors Entries) Using the same information as in E14-22 and E14-24, answer the following questions related to American Bank (creditor). Instructions

(L06) (Term Modification with Gain—Creditor’s Entries) Using the same information as in E14-22 and E14-24, answer the following questions related to American Bank (creditor).

Instructions

(a) Compute the loss American Bank will suffer under this new term modification. Prepare the journal entry to record the loss on American’s books.

(b) Prepare the interest receipt schedule for American Bank after the debt restructuring.

(c) Prepare the interest receipt entry for American Bank on December 31, 2018, 2019, and 2020.

(d) What entry should American Bank make on January 1, 2021?

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