Current Attempt in Progress Sheridan Inc. issued a debenture bond to Karamoutz Bank to finance new technology it developed. The debenture was for $460,000, issued at face value, with a 10-year term and interest payable at 10%. Sheridan's new technology proved not to be technically feasible and caused it to go into financial distress. The debenture is due today, December 31, 2023, and Sheridan does not have the funds to repay the debenture or the interest. As a result, Karamoutz agreed to extend the debenture due date for five more years and reduce the principal amount to $276,000 in exchange for receiving 18,400 common shares of Sheridan, currently trading at $5 per share. Interest will still be payable at 10% and will continue to be due annually on December 31 of each year. The current market rate is 12%. Sheridan prepares financial statements in accordance with IFRS. click here to view the factor table PRESENT VALUE OF 1. click here to view the factor table PRESENT VALUE OF AN ANNUITY OF 1. Using (1) factor tables, (2) a financial calculator, or (3) Excel function PV, prepare all the necessary journal entries on the books of Sheridan from the time of restructuring the debenture through maturity. (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and final answer to O decimal places e.g. 58,971. Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. List all debit entries before credit entries.) Date Dec. 31, 2023 Account Titles and Explanation Bonds Payable Debit 460000 Credit
Current Attempt in Progress Sheridan Inc. issued a debenture bond to Karamoutz Bank to finance new technology it developed. The debenture was for $460,000, issued at face value, with a 10-year term and interest payable at 10%. Sheridan's new technology proved not to be technically feasible and caused it to go into financial distress. The debenture is due today, December 31, 2023, and Sheridan does not have the funds to repay the debenture or the interest. As a result, Karamoutz agreed to extend the debenture due date for five more years and reduce the principal amount to $276,000 in exchange for receiving 18,400 common shares of Sheridan, currently trading at $5 per share. Interest will still be payable at 10% and will continue to be due annually on December 31 of each year. The current market rate is 12%. Sheridan prepares financial statements in accordance with IFRS. click here to view the factor table PRESENT VALUE OF 1. click here to view the factor table PRESENT VALUE OF AN ANNUITY OF 1. Using (1) factor tables, (2) a financial calculator, or (3) Excel function PV, prepare all the necessary journal entries on the books of Sheridan from the time of restructuring the debenture through maturity. (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and final answer to O decimal places e.g. 58,971. Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. List all debit entries before credit entries.) Date Dec. 31, 2023 Account Titles and Explanation Bonds Payable Debit 460000 Credit
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Current Attempt in Progress
Sheridan Inc. issued a debenture bond to Karamoutz Bank to finance new technology it developed. The debenture was for $460,000,
issued at face value, with a 10-year term and interest payable at 10%. Sheridan's new technology proved not to be technically feasible
and caused it to go into financial distress. The debenture is due today, December 31, 2023, and Sheridan does not have the funds to
repay the debenture or the interest. As a result, Karamoutz agreed to extend the debenture due date for five more years and reduce
the principal amount to $276,000 in exchange for receiving 18,400 common shares of Sheridan, currently trading at $5 per share.
Interest will still be payable at 10% and will continue to be due annually on December 31 of each year. The current market rate is 12%.
Sheridan prepares financial statements in accordance with IFRS.
click here to view the factor table PRESENT VALUE OF 1.
click here to view the factor table PRESENT VALUE OF AN ANNUITY OF 1.
Using (1) factor tables, (2) a financial calculator, or (3) Excel function PV, prepare all the necessary journal entries on the books of
Sheridan from the time of restructuring the debenture through maturity. (Round present value factor calculations to 5 decimal places, e.g.
1.25124 and final answer to O decimal places e.g. 58,971. Credit account titles are automatically indented when the amount is entered. Do not
indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. List all debit entries before credit
entries.)
Date
Dec. 31, 2023
Account Titles and Explanation
Bonds Payable
Debit
460000
Credit
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