On December 3 1 , 2 0 2 5 , American Bank enters into a debt restructuring
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Question:
On December American Bank enters into a debt restructuring agreement with Bonita Company, which is now experiencing financial trouble. The bank agrees to restructure a issued at par, $note receivable by the following modifications:
Reducing the principal obligation from $to $
Extending the maturity date from December to January
Reducing the interest rate from to
Bonitapays interest at the end of each year. On January Bonita Company pays $in cash to American Bank.
ANSWER THE FOLLOWING
a Can Bonita Company record a gain under this term modification? If yes, compute the gain for Bonita Company. If no enter the amount as
b Prepare the journal entries to record the gain on Bonitas books December
c Prepare the interest payment schedule of the note for Bonita Company after the debt restructuring.
d Prepare the interest payment entries for Bonita Company on December of and
e What entry should Bonita make on January
Related Book For
Intermediate Accounting
ISBN: 978-1119503668
17th edition
Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfiel
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