equired: repare all journal entries by First Lincoln Bank to record the restructuring and any remaining transactions, for current and sture 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) reduce the remaining four interest payments to $2.8 million each, and (c) reduce the principal to $35 million.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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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) reduce the remaining four interest
payments to $2.8 million each, and (c) reduce the principal to $35 million.
Transcribed Image Text: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) reduce the remaining four interest payments to $2.8 million each, and (c) reduce the principal to $35 million.
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