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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Excel Corporation is experiencing financial difficulty and has met with their creditor (BMO) to explore their options related to a $1.5 million, 6% note payable that is outstanding. The note was issued on September 1, 2020 when the market rate of interest was 6%. There are two years remaining on the note and the current market rate of interest is 8%. Excel and BMO prepare financial statements in accordance with IFRS. For each of the following independent situations prepare the journal entry that both Excel and BMO would on their books. BMO agrees to accept Excel common shares valued at $1,000,000 as settlement of the debt. BMO agrees to accept land as settlement of the debt. The land is on the books of Excel for $500,000 and has a market value of $1,250,000. BMO agrees to modify the terms so that Excel is not paying any interest on the note for the remaining two years. BMO agrees to reduce the principal balance to $1,000,000 and requires interest only payments for the next two years…
At January 1, 2024, Mahmoud Industries, Incorporated, owed Second BancCorp $15 million under a 10% note due December 31, 2026. Interest was paid last on December 31, 2022. Mahmoud was experiencing severe financial difficulties and asked Second BancCorp to modify the terms of the debt agreement. After negotiation Second BancCorp agreed to: a. Forgive the interest for 2023 and 2024. b. Reduce the remaining two years' interest payments to $1 million each and delay the first payment until December 31, 2025. c. Reduce the unpaid principal amount to $14 million. Required: Prepare the journal entries by Mahmoud Industries, Incorporated, necessitated by the restructuring of the debt at (1) January 1, 2024; (2) December 31, 2025; and (3) December 31, 2026. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in whole dollars.
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On December 31, 2019, GMC had a document payable with a value in the $ 100,000 books. GMC has faced economic difficulties that have not allowed to meet the payment of this debt. Suppose that on the date mentioned the The bank agreed to change the terms of the loan as follows: the principal (maturity value) was reduced to $ 80,000, the expiration date was changed to 31 December 2022, and the contractual interest rate was reduced from 15% to 10%. Determine the effect of this restructuring of debt on the Net Income of GMC on 12/31/19. to. GMC is going to report a profit of $ 20,000. b. GMC will report a profit equal to 5% of the principal. c. GMC is going to report a profit of $ 4,000. d. When the terms of the contract are adjusted, the debtor does NOT report earnings.
Rothschild Chair Company, Incorporated, was indebted to First Lincoln Bank under a $40 million, 10% unsecured note. The note was signed January 1, 2014, and was due December 31, 2027. Annual interest was last paid on December 31, 2022. At January 1, 2024, Rothschild Chair Company was experiencing severe financial difficulties and negotiated a restructuring of the terms of the debt agreement. Note: Use appropriate factor(s) from the tables provided. (FV of $1. PV of $1. EVA of $1. PVA of $1. EVAD of $1 and PVAD of $.1) Required: Prepare all journal entries by First Lincoln Bank to record the restructuring and any remaining transactions, for current and future years, 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 $36 million but carried on Rothschild Chair Company's books at $33 million. 2. First Lincoln Bank agreed to (a) forgive the interest accrued from last year, (b)…
35.On December 31, 2021, the Trust Finance Company had a P5,000,000 note receivable from Leila Company. The note bears 10% interest. The books reported accrued interest of P500,000 on this date. Because of financial distress being suffered by Leila Company, Trust Finance agreed to the restructuring and modification of the terms of its loan to Burgundy as follows: ·reduction of principal to P3,500,000; ·reduction of interest to 7% payable annually beginning Dec. 31, 2022; ·accrued interest on Dec. 31, 2021 is condoned; and ·principal payment was reset to Dec. 31, 2023. The prevailing market rate of interest for similar obligations on the date of restructuring decreased to 9%. Use present value factors rounded to two decimal places. How much impairment loss should Trust Finance Company record on December 31, 2021 as a result of the restructuring?
Excel Corporation is experiencing financial difficulty and has met with their creditor (BMO) to explore their options related to a $1.5 million, 6% note payable that is outstanding. The note was issued on September 1, 2020 when the market rate of interest was 6%. There are two years remaining on the note and the current market rate of interest is 8%. Excel and BMO prepare financial statements in accordance with IERS. For each of the following independent situations prepare the journal entry that both Excel and BMO would on their books. a. BMO agrees to accept Excel common shares valued at $1,000,000 as settlement of the debt. 5. BMO agrees to accept land as settlement of the debt. The land is on the books of Excel for $500,000 and has a market value of $1,250,000. c. BMO agrees to modify the terms so that Excel is not paying any interest on the note for the remaining two years. d. BMO agrees to reduce the principal balance to $1,000,000 and requires interest only payments for the next…
ABC Company, due to extreme financial difficulties has negotiated a restructuring of its 10%, P10,000,000 note payable due on December 31, 2021. The unpaid interest on the note on such date is P1,000,000. The creditor has agreed to reduce the face value to P8,000,000, forgive the unpaid interest, reduce interest rate to 8% and extend the due date three years from December 31, 2021. The present value of 1 at 10% for three periods is 0.75 and present value of an ordinary annuity of 1 at 10% for three periods is 2.49. What is the gain on extinguishment of debt to be recognized by ABC Company on December 21, 2021?
what is notes recievable for On December 31;2025, Blue Inc. rendered services to Beghun Corporation at an agreed price of $106,641, accepting $41,800 down and agreeing to accept the balance in four equal installments of $20,900 receivable each December 31 . An assumed interest rate of 11% is imputed. Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.
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