On December 31, 2020, Flounder Bank enters into a debt restructuring agreement with Barkley Company, which is now experiencing financial trouble. The bank agrees to restructure a 12%, issued at par, $4,500,000 note receivable by the following modifications: 1. 2 3. Reducing the principal obligation from $4,500,000 to $3,600,000. Extending the maturity date from December 31, 2020, to January 1, 2024 Reducing the interest rate from 12% to 10%. Barkley pays interest at the end of each year. On January 1, 2024, Barkley Company pays $3.600,000 in cash to Flounder Bank Answer the following questions related to Flounder Bank (creditor)
On December 31, 2020, Flounder Bank enters into a debt restructuring agreement with Barkley Company, which is now experiencing financial trouble. The bank agrees to restructure a 12%, issued at par, $4,500,000 note receivable by the following modifications: 1. 2 3. Reducing the principal obligation from $4,500,000 to $3,600,000. Extending the maturity date from December 31, 2020, to January 1, 2024 Reducing the interest rate from 12% to 10%. Barkley pays interest at the end of each year. On January 1, 2024, Barkley Company pays $3.600,000 in cash to Flounder Bank Answer the following questions related to Flounder Bank (creditor)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:On December 31, 2020, Flounder Bank enters into a debt restructuring agreement with Barkley Company, which is now experiencing
financial trouble. The bank agrees to restructure a 12%, issued at par, $4,500,000 note receivable by the following modifications:
1. Reducing the principal obligation from $4,500,000 to $3,600,000.
Extending the maturity date from December 31, 2020, to January 1, 2024
Reducing the interest rate from 12% to 10%.
2
3.
Barkley pays interest at the end of each year. On January 1, 2024, Barkley Company pays $3.600,000 in cash to Flounder Bank
Answer the following questions related to Flounder Bank (creditor)
Transcribed Image Text:Prepare the interest receipt entry for Flounder Bank on December 31, 2022. (Round answers to 0 decimal places, eg. 38,548. 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.)
Date
December
31, 2022
Account Titles and Explanation
Debit
Credit
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