Question: Use the same information as in E14-22 above except that American Bank reduced the principal to $1,900,000 rather than $2,400,000. On January 1, 2016, Barkley

Use the same information as in E14-22 above except that American Bank reduced the principal to $1,900,000 rather than $2,400,000. On January 1, 2016, Barkley pays $1,900,000 in cash to American Bank for the principal.

Instructions
(a) Can Barkley Company record a gain under this term modification? If yes, compute the gain for Barkley Company.

(b) Prepare the journal entries to record the gain on Barkley’s books.
(c) What interest rate should Barkley use to compute its interest expense in future periods? Will your answer be the same as in E14-22 above? Why or why not?
(d) Prepare the interest payment schedule of the note for Barkley Company after the debt restructuring.
(e) Prepare the interest payment entries for Barkley Company on December 31, of 2013, 2014, and 2015.
(f) What entry should Barkley make on January 1, 2016?

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Answer a Can Barkley Company record a gain under the term modification Yes If yes compute the gain for Barkley Company The Gain for Barkley Company 530000 b Prepare the journal entries to record the g... View full answer

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