Buffalo Limited owes $300,000 to Kingbird Inc. on a 10-year, 12% note due on December 31, 2020. The note was issued at par.Because Buffalo is in financial trouble, Kingbird Inc. agrees to extend the maturity date to December 31, 2022, reduce the principal to$250,000, and reduce the interest rate to 5%, payable annually on December 31. The market rate is currently 5%. Buffalo preparesfinancial statements in accordance with IFRS.Click here to view the factor table PRESENT VALUE OF 1.Click here to view the factor table PRESENT VALUE OF AN ANNUITY OF 1.Using (1) factor tables, (2) a financial calculator, or (3) Excel function PV, prepare the journal entries on Buffalo's books on December31, 2020, 2021, and 2022. (Hint: Refer to Chapter 3 for tips on calculating.) (For calculation purposes, use 5 decimal places as displayed inthe factor table provided and round final answers to O decimal places, e.g. 5,275. Credit account titles are automatically indented when theamount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.)DateAccount Titles and ExplanationDebit100Credit

12% note is issued at par for $300,000. Since the Buffalo Limited is in financial trouble, the…

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Business

Accounting

prepare the journal entries on Buffalo's books on December

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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Question

Buffalo Limited owes $300,000 to Kingbird Inc. on a 10-year, 12% note due on December 31, 2020. The note was issued at par.
Because Buffalo is in financial trouble, Kingbird Inc. agrees to extend the maturity date to December 31, 2022, reduce the principal to
$250,000, and reduce the interest rate to 5%, payable annually on December 31. The market rate is currently 5%. Buffalo prepares
financial statements in accordance with IFRS.
Click here to view the factor table PRESENT VALUE OF 1.
Click here to view the factor table PRESENT VALUE OF AN ANNUITY OF 1.
Using (1) factor tables, (2) a financial calculator, or (3) Excel function PV, prepare the journal entries on Buffalo's books on December
31, 2020, 2021, and 2022. (Hint: Refer to Chapter 3 for tips on calculating.) (For calculation purposes, use 5 decimal places as displayed in
the factor table provided and round final answers to O decimal places, e.g. 5,275. Credit account titles are automatically indented when the
amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.)
Date
Account Titles and Explanation
Debit
100
Credit

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