Daniel Sandhill is the sole shareholder of Sandhill Inc., which is currently under bankruptcy court protection. As a debtor in possession, he has negotiated a revised loan agreement with United Bank. Sandhill Inc.’s $696,000, 10-year, 11% note issued at par was refinanced with a $696,000, 10-year, 4% note. Assume the market rate of interest is 11% at the refinancing date. Both Sandhill and United Bank prepare financial statements in accordance with IFRS 9. Prepare the journal entries to record this refinancing (1) on the books of Sandhill Inc. and (2) on the books of United Bank.
Daniel Sandhill is the sole shareholder of Sandhill Inc., which is currently under bankruptcy court protection. As a debtor in possession, he has negotiated a revised loan agreement with United Bank. Sandhill Inc.’s $696,000, 10-year, 11% note issued at par was refinanced with a $696,000, 10-year, 4% note. Assume the market rate of interest is 11% at the refinancing date. Both Sandhill and United Bank prepare financial statements in accordance with IFRS 9.
Prepare the
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