E14.18 (LO 3) (Loan Modification) On December 31, 2022, Sterling Bank enters into a debtrestructuring agreement with Barkley plc, which is now experiencing financial trouble. The bankagrees to restructure a 12%, issued at par, £3,000,000 note receivable by the following modifications:1. Reducing the principal obligation from £3,000,000 to £2,400,000.2. Extending the maturity date from December 31, 2022, to January 1, 2026.3. Reducing the interest rate from 12% to 10%. Barkley's market rate of interest is 15%.Barkley pays interest at the end of each year. On January 1, 2026, Barkley pays £2,400,o00 in cash toSterling Bank.Instructionsa. Can Barkley record a gain under the term modification mentioned above? Explain.b. Prepare the amortization schedule of the note for Barkley after the debt modification.c. Prepare the interest payment entry for Barkley on December 31, 2024.d. What entry should Barkley make on January 1, 2026?

a) No, Gain recorded by the Barkly in the term of modification as mentioned.

Answered: cation from £3,000,000 from December…

Business

Accounting

cation from £3,000,000 from December 31, 202 com 12% to 1o%. Barkley

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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