On December $31,2025,$ American Bank enters into a debt restructuring agreement with Sweet Company, which is now experiencing financial trouble. The bank agrees to restructure a $12\%,$ issued at par, $$3,700,000$ note receivable by the following modifications:

Reducing the principal obligation from $$3,700,000$ to $$2,960,000.$

Extending the maturity date from December $31,2025,$ to January $1,2029.$

Reducing the interest rate from $12\%$ to $10\%.$

Sweet pays interest at the end of each year. On January $1,2029,$ Sweet Company pays $$2,960,000$ in cash to American Bank. Answer the following questions related to American Bank $($creditor$).$

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What interest rate should American Bank use to calculate the loss on the debt restructuring?

Interest rate $\%$

$(1)$ Compute the loss that American Bank will suffer from the debt restructuring. $($Round intermediate calculations to $5$ decimal places, e$.$g$.0\mathrm{.}23465$ and final answer to $0$ decimal places, e$.$g$.38,548.)$

Loss on restructuring of debt $

$(2)$ Prepare the journal entry to record the loss. $($If no entry is required, select $"$No Entry" for the account titles and enter Ofor the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually. List debit entry before credit entry. Round intermediate calculations to $5$ decimal places, e$.$g$.0\mathrm{.}23465$ and final answers to $0$ decimal places, e$.$g$.38,548.)$

$$

Prepare the interest receipt schedule for American Bank after the debt restructuring. $($Round answers to $0$ decimal places, e$.$g$.38,548.)$

$\backslash$table$[[,,$AMERICAN BANK Interest Receipt Schedule After Debt Restructuring Effective$-$Interest Rate,,$],[$Date$,,,\backslash$table$[[$Interest$],[$Revenue$]],,$Increase in Carrying Amount,,Carrying Value of Note$],[2/31/25,$$$,$$$,,$$$,,$$$,],[2/31/26,,,,,,,],[2/31/27,,,,,,,],[2/31/28,,,,,,,],[$stal$,$$$,$$$,,$$$,,,]]$

Date

Account Titles and Explanation

Debit

Credit

December

$31,2027$

$$

$$

$q,$

$$

$$

$$

$$

$$

List of Accounts

What entry should American Bank make on January $1,2029?($If no entry is required, select $"$No Entry" for the account titles and enter $0$ for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually. List all debit entries before credit entries.$)$