Sportz Bykes, Inc., approached its bankers, the United Bank of Canada to seek for accommodation on a

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Question:

Sportz Bykes, Inc., approached its bankers, the United Bank of Canada to seek for accommodation on a debt SBI owed. The said debt consisted of a 10%, 4-year note payable, issued at par and due July 1, 2022 for an amount of $380,000. All interest due on the debt was already settled by SBI. The two entities agreed to the following revised terms presented by SBI:

The amended terms would become effective July 1, 2022;

the principal payable was reduced to $300,000 and would be due July 1, 2024;

the annual interest payments are to be reduced to 6% of the revised principal for the years, 2022-23 and 2023-24; and

the market rate on July 1, 2022 was determined to be 9% .

assume that the renegotiated terms resulted in a settlement. SBI and UBC will record the new note in their respective books of accounts with amounts as follows [SBI: $; UBC: $]

a. SBI: $300,000; UBC: $380,000

b. SBI: $279,202; UBC: $380,000

c. SBI: $284,168; UBC: $380,000

d. SBI: $284,168; UBC: $300,000

e. None of the above answers.