At January 1, 2018, NCI Industries, Inc., was indebted to First Federal Bank under a $240,000, 10% unsecurednote. The note was signed January 1, 2014, and was due December 31, 2019. Annual interest was last paid onDecember 31, 2016. NCI was experiencing severe financial difficulties and negotiated a restructuring of the termsof the debt agreement. First Federal agreed to reduce last year’s interest and the remaining two years’ interestpayments to $11,555 each and delay all payments until December 31, 2019, the maturity date.Required:Prepare the journal entries by NCI Industries, Inc., necessitated by the restructuring of the debt at: (1) January 1,2018; (2) December 31, 2018; and (3) December 31, 2019.
At January 1, 2018, NCI Industries, Inc., was indebted to First Federal Bank under a $240,000, 10% unsecured
note. The note was signed January 1, 2014, and was due December 31, 2019. Annual interest was last paid on
December 31, 2016. NCI was experiencing severe financial difficulties and negotiated a restructuring of the terms
of the debt agreement. First Federal agreed to reduce last year’s interest and the remaining two years’ interest
payments to $11,555 each and delay all payments until December 31, 2019, the maturity date.
Required:
Prepare the
2018; (2) December 31, 2018; and (3) December 31, 2019.
Trending now
This is a popular solution!
Step by step
Solved in 3 steps
