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8. At January 1, 2024, S Company, Incorporated, was indebted to First Bank under a $20 million, 10% unsecured note. The note was signed January 1, 2021, and was due December 31, 2027. Annual interest was last paid on December 31, 2022. S Company was experiencing severe financial difficulties and negotiated a restructuring of the terms of the debt agreement. Required: Prepare all journal entries by S Company, Incorporated, to record the restructuring and ny remaining transactions relating to the debt under each of the independent ircumstances below: irst Bank agreed to settle the debt in exchange for land having a fair value of $16 million ut carried on S Company's books at $13 million. irst Bank agreed to (a) forgive the interest accrued from last year, (b) reduce the emaining four interest payments to $1 million each, and (c) reduce the principal to $15 million.

8. At January 1, 2024, S Company, Incorporated, was indebted to First Bank under a $20 million, 10% unsecured note. The note was signed January 1, 2021, and was due December 31, 2027. Annual interest was last paid on December 31, 2022. S Company was experiencing severe financial difficulties and negotiated a restructuring of the terms of the debt agreement. Required: Prepare all journal entries by S Company, Incorporated, to record the restructuring and ny remaining transactions relating to the debt under each of the independent ircumstances below: irst Bank agreed to settle the debt in exchange for land having a fair value of $16 million ut carried on S Company's books at $13 million. irst Bank agreed to (a) forgive the interest accrued from last year, (b) reduce the emaining four interest payments to $1 million each, and (c) reduce the principal to $15 million.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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8. At January 1, 2024, S Company, Incorporated, was indebted to First Bank under a $20 million, 10% unsecured note. The note was signed January 1, 2021, and was due December 31, 2027. Annual interest was last paid on December 31, 2022. S Company was experiencing severe financial difficulties and negotiated a restructuring of the terms of the debt agreement. Required: Prepare all journal entries by S Company, Incorporated, to record the restructuring and any remaining transactions relating to the debt under each of the independent circumstances below: First Bank agreed to settle the debt in exchange for land having a fair value of $16 million but carried on S Company's books at $13 million. First Bank agreed to (a) forgive the interest accrued from last year, (b) reduce the remaining four interest payments to $1 million each, and (c) reduce the principal to $15 million.
Transcribed Image Text:8. At January 1, 2024, S Company, Incorporated, was indebted to First Bank under a $20 million, 10% unsecured note. The note was signed January 1, 2021, and was due December 31, 2027. Annual interest was last paid on December 31, 2022. S Company was experiencing severe financial difficulties and negotiated a restructuring of the terms of the debt agreement. Required: Prepare all journal entries by S Company, Incorporated, to record the restructuring and any remaining transactions relating to the debt under each of the independent circumstances below: First Bank agreed to settle the debt in exchange for land having a fair value of $16 million but carried on S Company's books at $13 million. First Bank agreed to (a) forgive the interest accrued from last year, (b) reduce the remaining four interest payments to $1 million each, and (c) reduce the principal to $15 million.
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