Using the same information as in E14-22B above, answer the following questions related to Zettlein Bank (creditor).

Question:

Using the same information as in E14-22B above, answer the following questions related to Zettlein Bank (creditor).

In E14-22B, On December 31, 2014, Zettlein Bank enters into a debt restructuring agreement with Larkin Company, which is now experiencing financial trouble. The bank agrees to restructure a 12%, issued at par, $10,000,000 note receivable by the following modifications:
1. Reducing the principal obligation from $10,000,000 to $8,000,000.
2. Extending the date from December 31, 2014, to December 31, 2017.
3. Reducing the interest rate from 12% to 10%.
Larkin pays interest at the end of each year. On January 1, 2018, Larkin Company pays $8,000,000 in cash to Zettlein Bank.

Instructions
(a) What interest rate should Zettlein Bank use to calculate the loss on the debt restructuring?
(b) Compute the loss that Zettlein Bank will suffer from the debt restructuring. Prepare the journal entry to record the loss.
(c) Prepare the interest receipt schedule for Zettlein Bank after the debt restructuring.
(d) Prepare the interest receipt entry for Zettlein Bank on December 31, 2016.
(e) What entry should Zettlein Bank make on January 1, 2018?

Maturity
Maturity is the date on which the life of a transaction or financial instrument ends, after which it must either be renewed, or it will cease to exist. The term is commonly used for deposits, foreign exchange spot, and forward transactions, interest...