On December 31, 2020, Short Co. is in financial difficulty and cannot pay a note due that day. It is a $2,000,000 note with $200,000 accrued interest payable to Bryan, Inc. Bryan agrees to forgive the accrued interest, reduce the principle balance due to $1,750,000, extend the maturity date to December 31, 2022, and reduce the interest rate to 4%. The present value of the restructured cash flows is $1,700,000. Instructions: Prepare entries for the following: 1. The restructure on Short's books. 2. The restructure on Bryan's books. 3. Short's payment of interest on December 31, 2021.

On December 31, 2020, Short Co. is in financial difficulty and cannot pay a note due that day. It is a $2,000,000 note with $200,000 accrued interest payable to Bryan, Inc. Bryan agrees to forgive the accrued interest, reduce the principle balance due to $1,750,000, extend the maturity date to December 31, 2022, and reduce the interest rate to 4%. The present value of the restructured cash flows is $1,700,000. Instructions: Prepare entries for the following: 1. The restructure on Short's books. 2. The restructure on Bryan's books. 3. Short's payment of interest on December 31, 2021.

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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