At January 1, 2021, Rothschild Chair Company, Inc., was indebted to First Lincoln Bank under a $39 million, 10% unsecured note. Thenote was signed January 1, 2018, and was due December 31, 2024. Annual interest was last paid on December 31, 2019. RothschildChair Company was experiencing severe financial difficulties and negotiated a restructuring of the terms of the debt agreement. (FV of$1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.)Required:Prepare all journal entries by Rothschild Chair Company, Inc., to record the restructuring and any remaining transactions relating to thedebt under each of the independent circumstances below:1. First Lincoln Bank agreed to settle the debt in exchange for land having a fair value of $35 million but carried on Rothschild ChairCompany's books at $30.1 million.2. First Lincoln Bank agreed to (a) forgive the interest accrued from last year, (b) reduce the remaining four interest payments to $1million each, and (c) reduce the principal to $32.1 million.3. First Lincoln Bank agreed to defer all payments (including accrued interest) until the maturity date and accept $54,161,000 at thattime in settlement of the debt.Complete this question by entering your answers in the tabs below.Required 1 Required 2First Lincoln Bank agreed to settle the debt in exchange for land having a fair value of $35 million but carried on Rothschild ChairCompany's books at $30.1 million. (If no entry is required for a transaction/event, select "No journal entry required" in the first accountfield. Enter your answers in millions rounded to 1 decimal place (i.e., 5,500,000 should be entered as 5.5).)View transaction listJournal entry worksheet<1Required 32Record any necessary adjustment to land prior to recording the exchange fordebt.Event1Note: Enter debits before credits.General JournalDebitCredit>

Journal entry records the accounting transactions of a business in a journal book. All the business…

At January 1, 2021, Rothschild Chair Company, Inc., was indebted to First Lincoln Bank under a $39 million, 10% unsecured note. The note was signed January 1, 2018, and was due December 31, 2024. Annual interest was last paid on December 31, 2019. Rothschild Chair Company was experiencing severe financial difficulties and negotiated a restructuring of the terms of the debt agreement. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.)

At January 1, 2021, Rothschild Chair Company, Inc., was indebted to First Lincoln Bank under a $39 million, 10% unsecured note. The note was signed January 1, 2018, and was due December 31, 2024. Annual interest was last paid on December 31, 2019. Rothschild Chair Company was experiencing severe financial difficulties and negotiated a restructuring of the terms of the debt agreement. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.)

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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Question

At January 1, 2021, Rothschild Chair Company, Inc., was indebted to First Lincoln Bank under a $39 million, 10% unsecured note. The
note was signed January 1, 2018, and was due December 31, 2024. Annual interest was last paid on December 31, 2019. Rothschild
Chair Company was experiencing severe financial difficulties and negotiated a restructuring of the terms of the debt agreement. (FV of
$1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.)
Required:
Prepare all journal entries by Rothschild Chair Company, Inc., to record the restructuring and any remaining transactions relating to the
debt under each of the independent circumstances below:
1. First Lincoln Bank agreed to settle the debt in exchange for land having a fair value of $35 million but carried on Rothschild Chair
Company's books at $30.1 million.
2. First Lincoln 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 $32.1 million.
3. First Lincoln Bank agreed to defer all payments (including accrued interest) until the maturity date and accept $54,161,000 at that
time in settlement of the debt.
Complete this question by entering your answers in the tabs below.
Required 1 Required 2
First Lincoln Bank agreed to settle the debt in exchange for land having a fair value of $35 million but carried on Rothschild Chair
Company's books at $30.1 million. (If no entry is required for a transaction/event, select "No journal entry required" in the first account
field. Enter your answers in millions rounded to 1 decimal place (i.e., 5,500,000 should be entered as 5.5).)
View transaction list
Journal entry worksheet
<
1
Required 3
2
Record any necessary adjustment to land prior to recording the exchange for
debt.
Event
1
Note: Enter debits before credits.
General Journal
Debit
Credit
>

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