Exercise $7-36($Algo$)$ Troubled debt restructuring $[$Appendix $7$B$]$

At January $1,2024,$ Clayton Holsts Incorporated owed Third BancCorp $$13$ million, under a $10\%$ note due December $31,2025.$ Interest was pald last on December $31,2022.$ Clayton was experiencing severe financlal difficulties and asked Third BancCorp to modify the terms of the debt agreement. After negotlation Third BancCorp agreed to do the following:

Note: Use appropriate factor$($s$)$ from the tables provided. $($FV of $$1.$ PV of $$1.$ FVA of $$1.$ PVA of $$1.$ FVAD of $$1$ and PVAD of $$1)$

Forglve the interest accrued for the year just ended.

Reduce the remaining two years' interest payments to $$1$ million each.

Reduce the principal amount to $$12$ million.

Requlred:

$1-3.$ Prepare the journal entries by Third BancCorp necessitated by the restructuring of the debt at January $1,2024,$ December $31,2024$ and December $31,2025.$

Note: Enter your answers In whole dollars. If no entry is required for a transaction$/$event$,$ select $"$No journal entry required" In the first account fleld. Round your final answers to nearest whole dollar amount.

View transaction list

$\backslash$table$[[,$No$,$Date,General Journal,Debit,Credit$],[$i$,1,$January $01,2024,$Bad debt expense,,$],[,,$Interest receivable,,$1,300,000$