On December 31, 2017, Short Co. is in financial difficulty and cannot pay a note due...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
On December 31, 2017, Short Co. is in financial difficulty and cannot pay a note due that day. It is a $2,000,000 face value note with $200,000 accrued interest payable to Bryan, Inc. The original market rate of interest on the note was 12.58613%. Bryan agrees to forgive the accrued interest, extend the maturity date (two years) to December 31, 2019, and reduce the interest rate to 4%. The present value of the restructured cash flows is $1,712,000 (using the original market rate). Do NOT add rows to the spreadsheet! Required (The debtor) 1. Prepare any journal entry (if any) on the date of the restructured debt needed on Short's books (the Debtor). Otherwise, leave blank. Debit accounts Credit accounts Notes payable Interest payable Dr=Cr Debits 2,000,000 2,000,000 2. Prepare the journal entry for the payment of the cash interest on December 31, 2018 on Short's books (the Debtor) Debit accounts Credit accounts Debits Credits 200,000 200,000 Credits Dr Cr Required: (The Creditor) 1. Prepare any journal entry (if any) on the date of the restructured debt needed on Bryan's books (the Creditor) Debit accounts Credit accounts Debits Credits Dr=Cr 2. Prepare the amortization schedule needed by the creditor (Bryan) for the modified loan. Historical rate = 0.1258613 Pmt Interest revenue Cash 1 2 Amorization Carrying Value Space for work Space for work On December 31, 2017, Short Co. is in financial difficulty and cannot pay a note due that day. It is a $2,000,000 face value note with $200,000 accrued interest payable to Bryan, Inc. The original market rate of interest on the note was 12.58613%. Bryan agrees to forgive the accrued interest, extend the maturity date (two years) to December 31, 2019, and reduce the interest rate to 4%. The present value of the restructured cash flows is $1,712,000 (using the original market rate). Do NOT add rows to the spreadsheet! Required (The debtor) 1. Prepare any journal entry (if any) on the date of the restructured debt needed on Short's books (the Debtor). Otherwise, leave blank. Debit accounts Credit accounts Notes payable Interest payable Dr=Cr Debits 2,000,000 2,000,000 2. Prepare the journal entry for the payment of the cash interest on December 31, 2018 on Short's books (the Debtor) Debit accounts Credit accounts Debits Credits 200,000 200,000 Credits Dr Cr Required: (The Creditor) 1. Prepare any journal entry (if any) on the date of the restructured debt needed on Bryan's books (the Creditor) Debit accounts Credit accounts Debits Credits Dr=Cr 2. Prepare the amortization schedule needed by the creditor (Bryan) for the modified loan. Historical rate = 0.1258613 Pmt Interest revenue Cash 1 2 Amorization Carrying Value Space for work Space for work
Expert Answer:
Related Book For
Intermediate Accounting
ISBN: 978-1119048541
11th Canadian edition Volume 2
Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield, Nicola M. Young, Irene M. Wiecek, Bruce J. McConomy
Posted Date:
Students also viewed these accounting questions
-
On December 31, 2013, Samsung Co. is in financial difficulty and cannot pay a note due that day. It is a $750,000 note with $75,000 accrued interest payable to Bayer, Inc. Bayer agrees to forgive the...
-
1. On December 31, 2012, Nolte Co. Is in financial difficulty and cannot pay a note due that day. It is a $1,800,000 note with $180,000 accrued interest payable to Piper, Inc. Piper agrees to accept...
-
State Newtons second law of motion. What are the limitations on the use of Newtons second law? Explain.
-
Name and describe the functions of the posterior pituitary hormones.
-
For the following exercises, use Descartes Rule of Signs to find the possible number of positive and negative solutions. x 3 3x 2 2x + 4 = 0
-
Determine if the mixed method aspect is concurrent, sequential,, or nested. Develop a hypothetical research scenario that would necessitate the use of the Mixed Method A-B-A Design. The research will...
-
Yoklic Corporation currently manufactures a subassembly for its main product. The costs per unit are as follows: Direct materials .......... $ 4.00 Direct labor ................. 30.00 Variable...
-
Suppose your starting salary is $50,000. You would like to open a savings account to save for your retirement and any large future expenses. Most Economists agree that you should allocate 20% of your...
-
For the diode circuit below, determine the threshold voltage VDO of the diode model. It is known that n = 1.3, Vs = 0.73 V, ID = 2.5 mA, and T = 16C. ID Vs DV VD
-
Savor the Sweet Bakery has been selling 550 boxes of cupcakes per month at a price of $19/box. When they raised their price to $21/box, they sold only 450 boxes. 1)What is the price elasticity of...
-
How does the immune system distinguish between self and non-self antigens, and what are the consequences of autoimmune diseases where this distinction breaks down?
-
In footnotes to its 2016 annual report, Bancfirst Corp. reported that held-to-maturity debt securities with an amortized cost of $4,365 thousand had an estimated fair value of $4,403 thousand. a....
-
Bobby has a real salary of $61,430. Julianne has a real salary of $124,875. Neither one contributes to a retirement plan. a. If Bobby & Julianne are married and take a standard deduction, how much...
-
On January 1, 2018, the Coldstone Corporation adopted the dollar-value LIFO retail inventory method. Beginning inventory at cost and at retail were $170,000 and $273,000, respectively. Net purchases...
-
Officers Jones and Henderson are well-respected police officers in the Woodlawn community. They have been recognized, both within the police department and by the community, for their outstanding...
-
Maria Castigliani is head of the purchasing department of Ambrosiana Merceti, a medium-sized construction company. One morning she walked into the office and said, The main problem in this office is...
-
Refer to E16-2. Assume the same facts except that the forward contract is a futures contract that trades on the Futures Exchange. On January 1, 2017, Roper is required to deposit $65 with the stock-...
-
The following selected account balances are taken from the financial statements of Mandrich Inc. at its calendar year end prepared using IFRS: At December 31, 2017, the following information is...
-
The following information is in regard to Saverio Corp.'s defined benefit pension plan. Defined benefit obligation, 1/1/17 (before amendment) .............. $239,000 Plan assets, 1/1/17...
-
Identify and correct the errors in the following passages. a. Company's are finding it to their advantage to cultivate their suppliers. Partnerships among a company and it's suppliers can yield hefty...
-
How can you create an effective strategy for your interview?
-
How can you plan for a successful career?
Study smarter with the SolutionInn App