At January 1, 2024, Clayton Hoists Incorporated owed Third BancCorp $20 million, under a 10% note due December 31, 2025. Interest was paid last on December 31, 2022. Clayton was experiencing severe financial difficulties and asked Third BancCorp to modify the terms of the debt agreement. After negotiation Third BancCorp agreed to do the following: Note: Use appropriate factor(s) from the tables provided. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) • Forgive the interest accrued for the year just ended. • Reduce the remaining two years' interest payments to $1 million each. • Reduce the principal amount to $19 million. Required: 1-3. Prepare the journal entries by Third BancCorp necessitated by the restructuring of the debt at January 1, 2024, December 31, 2024 and December 31, 2025. Note: Enter your answers in whole dollars. If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round your final answers to nearest whole dollar amount.

At January 1, 2024, Clayton Hoists Incorporated owed Third BancCorp $20 million, under a 10% note due December 31, 2025. Interest was paid last on December 31, 2022. Clayton was experiencing severe financial difficulties and asked Third BancCorp to modify the terms of the debt agreement. After negotiation Third BancCorp agreed to do the following: Note: Use appropriate factor(s) from the tables provided. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) • Forgive the interest accrued for the year just ended. • Reduce the remaining two years' interest payments to $1 million each. • Reduce the principal amount to $19 million. Required: 1-3. Prepare the journal entries by Third BancCorp necessitated by the restructuring of the debt at January 1, 2024, December 31, 2024 and December 31, 2025. Note: Enter your answers in whole dollars. If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round your final answers to nearest whole dollar amount.

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, 2024, Clayton Hoists Incorporated owed Third BancCorp $20 million, under a 10% note due December 31, 2025. Interest
was paid last on December 31, 2022. Clayton was experiencing severe financial difficulties and asked Third BancCorp to modify the
terms of the debt agreement. After negotiation Third BancCorp agreed to do the following:
Note: Use appropriate factor(s) from the tables provided. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1)
• Forgive the interest accrued for the year just ended.
• Reduce the remaining two years' interest payments to $1 million each.
• Reduce the principal amount to $19 million.
Required:
1-3. Prepare the journal entries by Third BancCorp necessitated by the restructuring of the debt at January 1, 2024, December 31,
2024 and December 31, 2025.
Note: Enter your answers in whole dollars. If no entry is required for a transaction/event, select "No journal entry required" in the
first account field. Round your final answers to nearest whole dollar amount.
View transaction list
Journal entry worksheet
<
1
2 3 4
Record the restructuring of the debt at January 1.
Note: Enter debits before credits.
Date
January 01, 2024
General Journal
Debit
Credit

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