(c).Determine the loss on impairment that Culver Bank should recognize on December 31, 2022. (Round present value factors to 5decimal places, e.g. 0.52500 and final answer to O decimal places, e.g. 5,275.)Loss due to impairmenteTextbook and MediaSave for LaterDate12/31/20Prepare a note amortization schedule for Culver Bank up to December 31, 2022. (Round answers to O decimal places, e.g. 5,275.)12/31/2112/31/22$$Current Attempt in ProgressCashReceived9207992079$Note Amortization Schedule(Before Impairment)InterestRevenueAttempts: 0 of 3 usedI$Submit AnswerIncrease inCarryingAmountCarryAmourNotOn December 31, 2020, Flounder Company signed a $1,023,100 note to Culver Bank. The market interest rate at that time was 11%.The stated interest rate on the note was 9%, payable annually. The note matures in 5 years. Unfortunately, because of lower sales,Flounder's financial situation worsened. On December 31, 2022, Culver Bank determined that it was probable that the companywould pay back only $613,860 of the principal at maturity. However, it was considered likely that interest would continue to be paid,based on the $1,023,100 loan.

Note receivable refers to a written promise for the amounts to be received within a stipulated…

On December 31, 2020, Flounder Company signed a $1,023,100 note to Culver Bank. The market interest rate at that time was 11%. The stated interest rate on the note was 9%, payable annually. The note matures in 5 years. Unfortunately, because of lower sales, Flounder's financial situation worsened. On December 31, 2022, Culver Bank determined that it was probable that the company would pay back only $613,860 of the principal at maturity. However, it was considered likely that interest would continue to be paid, based on the $1,023,100 loan.

On December 31, 2020, Flounder Company signed a $1,023,100 note to Culver Bank. The market interest rate at that time was 11%. The stated interest rate on the note was 9%, payable annually. The note matures in 5 years. Unfortunately, because of lower sales, Flounder's financial situation worsened. On December 31, 2022, Culver Bank determined that it was probable that the company would pay back only $613,860 of the principal at maturity. However, it was considered likely that interest would continue to be paid, based on the $1,023,100 loan.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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At January 1, 2024, Mahmoud Industries, Incorporated, owed Second BancCorp $15 million under a 10% note due December 31, 2026. Interest was paid last on December 31, 2022. Mahmoud was experiencing severe financial difficulties and asked Second BancCorp to modify the terms of the debt agreement. After negotiation Second BancCorp agreed to: a. Forgive the interest for 2023 and 2024. b. Reduce the remaining two years' interest payments to $1 million each and delay the first payment until December 31, 2025. c. Reduce the unpaid principal amount to $14 million. Required: Prepare the journal entries by Mahmoud Industries, Incorporated, necessitated by the restructuring of the debt at (1) January 1, 2024; (2) December 31, 2025; and (3) December 31, 2026. Note: If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Enter your answers in whole dollars.
On December 31, 2017, Firth Company borrowed $62,092 from Paris Bank, signing a 5-year, $100,000 zero-interest-rate note. The note was issued to yield 10% interest. Unfortunately, during 2019, Firth began to experience financial difficulty. As a result, at December 31, 2019, Paris Bank determined that it was probable that it would collect only $75,000 at maturity. The market rate of interest on loans of this nature is now 11%.Instructions(a) Prepare the entry (if any) to record the impairment of the loan on December 31, 2019, by Paris Bank.(b) Prepare the entry on March 31, 2020, if Paris learns that Firth will be able to repay the loan under the original terms.
On December 31, 2020, Oriole Company has $6,941,000 of short-term debt in the form of notes payable to Gotham State Bank due in 2021. On December 28, 2020, Oriole enters into a refinancing agreement with Gotham that will permit it to borrow up to 52% of the gross amount of its accounts receivable. Receivables are expected to range between a low of $5,949,000 in May to a high of $7,947,000 in October during the year 2021. The interest cost of the maturing short-term debt is 15%, and the new agreement calls for a fluctuating interest at 1% above the prime rate on notes due in 2025. Oriole’s December 31, 2020, balance sheet is issued on February 15, 2021.Prepare a partial balance sheet for Oriole at December 31, 2020, showing how its $6,941,000 of short-term debt should be presented. (Enter account name only and do not provide descriptive information.) ORIOLE COMPANYPartial Balance Sheetchoose the accounting period select…
Excel Corporation is experiencing financial difficulty and has met with their creditor (BMO) to explore their options related to a $1.5 million, 6% note payable that is outstanding. The note was issued on September 1, 2020 when the market rate of interest was 6%. There are two years remaining on the note and the current market rate of interest is 8%. Excel and BMO prepare financial statements in accordance with IERS. For each of the following independent situations prepare the journal entry that both Excel and BMO would on their books. a. BMO agrees to accept Excel common shares valued at $1,000,000 as settlement of the debt. 5. BMO agrees to accept land as settlement of the debt. The land is on the books of Excel for $500,000 and has a market value of $1,250,000. c. BMO agrees to modify the terms so that Excel is not paying any interest on the note for the remaining two years. d. BMO agrees to reduce the principal balance to $1,000,000 and requires interest only payments for the next…
On December 31, 2020, Monty Co. performed environmental consulting services for Hayduke Co. Hayduke was short of cash, and Monty Co. agreed to accept a $296,600 zero-interest-bearing note due December 31, 2022, as payment in full. Hayduke is somewhat of a credit risk and typically borrows funds at a rate of 12%. Monty is much more creditworthy and has various lines of credit at 6%. Prepare the journal entry to record the transaction of December 31, 2020, for the Monty Co. (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and final answers to O decimal places, e.g. 5,275. 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 the amount is entered. Do not indent manually.) Debit Date Account Titles and Explanation Dec. 31, 2020 eTextbook and Media List of Accounts Assuming Monty Co's fiscal year-end is December 31, prepare the journal entry for December 31, 2021. (Round…
On December 31, 2020, Larkspur Co. performed environmental consulting services for Hayduke Co. Hayduke was short of cash, and Larkspur Co. agreed to accept a $ 252,100 zero-interest-bearing note due December 31, 2022, as payment in full. Hayduke is somewhat of a credit risk and typically borrows funds at a rate of 10%. Larkspur is much more creditworthy and has various lines of credit at 6%.Click here to view factor table. https://education.wiley.com/content/Kieso_Intermediate_Accounting_17e/media/simulations/interest_rate_tables.pdf
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At January 1, 2018, Brainard Industries, Inc., owed Second BancCorp $12 million under a 10% note due December 31, 2020. Interest was paid last on December 31, 2016. Brainard was experiencing severe financial difficultiesand asked Second BancCorp to modify the terms of the debt agreement. After negotiation Second BancCorpagreed to:a. Forgive the interest accrued for the year just ended.b. Reduce the remaining two years’ interest payments to $1 million each and delay the first payment untilDecember 31, 2019.c. Reduce the unpaid principal amount to $11 million.Required:Prepare the journal entries by Brainard Industries, Inc., necessitated by the restructuring of the debt at (1) January1, 2018; (2) December 31, 2019; and (3) December 31, 2020.
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