Crane Corp. owes $ 283.000 to Cheyenne Trust. The debt is a 10-year, 12% note due December 31, 2020. Because Crane Corp. is in financial trouble, Cheyenne Trust agrees to extend the maturity date to December 31, 2022, reduce the principal to $ 236,000, and reduce the interest rate to 6%, payable annually on December 31. (a) Prepare the journal entries on Crane's books on December 31, 2020, 2021, 2022. (b) Prepare the journal entries on Cheyenne Trust's books on December 31, 2020, 2021, 2022. Click here to view factor tables. (Round present value factor calculations to 5 decimal places, eg. 1.25124 and the final answer to O decimal places eg 58,971. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually)

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Crane Corp. owes $ 283,000 to Cheyenne Trust. The debt is a 10-year, 12% note due December 31, 2020. Because Crane Corp. is in
financial trouble, Cheyenne Trust agrees to extend the maturity date to December 31, 2022, reduce the principal to $ 236,000, and
reduce the interest rate to 6%, payable annually on December 31.
(a)
Prepare the journal entries on Crane's books on December 31, 2020, 2021, 2022.
(b)
Prepare the journal entries on Cheyenne Trust's books on December 31, 2020, 2021, 2022.
Click here to view factor tables.
(Round present value factor calculations to 5 decimal places, eg. 1.25124 and the final answer to O decimal places eg. 58,971. If no entry is
required, select "No Entry" for the account titles and enter O for the amounts. Credit account titles are automatically indented when amount is
entered. Do not indent manually.)
Transcribed Image Text:Crane Corp. owes $ 283,000 to Cheyenne Trust. The debt is a 10-year, 12% note due December 31, 2020. Because Crane Corp. is in financial trouble, Cheyenne Trust agrees to extend the maturity date to December 31, 2022, reduce the principal to $ 236,000, and reduce the interest rate to 6%, payable annually on December 31. (a) Prepare the journal entries on Crane's books on December 31, 2020, 2021, 2022. (b) Prepare the journal entries on Cheyenne Trust's books on December 31, 2020, 2021, 2022. Click here to view factor tables. (Round present value factor calculations to 5 decimal places, eg. 1.25124 and the final answer to O decimal places eg. 58,971. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.)
Debit
Credit
(b) Date Account Titles and Explanation
Cheyenne Trust's
2020
Bad Debt Expense
Allowance for Doubtful Accounts
2021
Cash
Allowance for Doubtful Accounts
Interest Revenue
2022
Cash
Allowance for Doubtful Accounts
Interest Revenue
(To record Interest Revenue)
Cash
Allowance for Doubtful Accounts
Interest Revenue
(To record maturity of Notes Receivable)
Transcribed Image Text:Debit Credit (b) Date Account Titles and Explanation Cheyenne Trust's 2020 Bad Debt Expense Allowance for Doubtful Accounts 2021 Cash Allowance for Doubtful Accounts Interest Revenue 2022 Cash Allowance for Doubtful Accounts Interest Revenue (To record Interest Revenue) Cash Allowance for Doubtful Accounts Interest Revenue (To record maturity of Notes Receivable)
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