INTERMEDIATE ACCOUNTING 2DEBT RESTRUCTURE Problem 9-10 (AICPA Adapted)On January 1, 2021, Sunrise Company was experiencingextreme financial pressure and was in default in meetinginterest payment on a long term note of P6,000,000 due onDecember 31, 2021.The interest rate is 12% payable every December 31. Theaccrued interest payable on January 1, 2021 is P720,000.In an agreement with the creditor, the entity obtained thefollowing changes in the terms of note:a. The accrued interest on January 1, 2021 is forgiven.b. The principal is reduced by P500,000.c.d.The new interest rate is 8% payable every December 31.The new date of maturity is December 31, 2024.The prevailing market rate of interest is 10%.e.The present value of 1 at 12% for four periods is 0.64 and thepresent value of an ordinary annuity of 1 at 12% for fourperiods is 3.04.The PV of 1 at 10% for 4 periods is 0.68 and the PV of anordinary annuity of 1 at 10% for 4 periods is 3.17.Required:Prepare all journal entries for 2021.CS Scanned with CamScannerluba

Debt restructuring is a procedure that enables a private, public corporation or a sovereign…

Problem 9-10 (AICPA Adapted) On January 1, 2021, Sunrise Company was experiencing extreme financial pressure and was in default in meeting interest payment on a long term note of P6,000,000 due on December 31, 2021. The interest rate is 12% payable every December 31. The accrued interest payable on January 1, 2021 is P720,000. In an agreement with the creditor, the entity obtained the