Required: 1-3. Prepare the journal entries by Third BancCorp necessitated by the restructuring of the debt at January 1, 2021, December 31, 2021 and December 31, 2022. (Enter your answers in whole dollars. If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round your final answers to nearest whole dollar amount.)
Required: 1-3. Prepare the journal entries by Third BancCorp necessitated by the restructuring of the debt at January 1, 2021, December 31, 2021 and December 31, 2022. (Enter your answers in whole dollars. If no entry is required for a transaction/event, select "No journal entry required" in the first account field. Round your final answers to nearest whole dollar amount.)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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![Exercise 7-35 (Algo) Troubled debt restructuring [Appendix 7B]
At January 1, 2021, Clayton Hoists Inc. owed Third BancCorp $13 million, under a 10% note due December 31, 2022. Interest was paid
last on December 31, 2019. Clayton was experiencing severe financial difficulties and asked Third BancCorp to modify the terms of the
debt agreement. After negotiation Third BancCorp agreed to do the following: (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and
PVAD of $1) (Use appropriate factor(s) from the tables provided.):
●
Forgive the interest accrued for the year just ended.
Reduce the remaining two years' interest payments to $1 million each.
Reduce the principal amount to $12 million.
Required:
1-3. Prepare the journal entries by Third BancCorp necessitated by the restructuring of the debt at January 1, 2021, December 31, 2021
and December 31, 2022. (Enter your answers in whole dollars. If no entry is required for a transaction/event, select "No journal
entry required" in the first account field. Round your final answers to nearest whole dollar amount.)
No
1
2
3
4
Date
January 01, 2021 Bad debt expense
Interest receivable
December 31, 20 Cash
Bad debt expense
Interest revenue
December 31, 20 Cash
Bad debt expense
Interest revenue
December 31, 20 Cash
X Answer is not complete.
General Journal
Bad debt expense
Accounts receivable
**< 303 300
Debit
1,300,000 X
1,000,000
92,649 X
100,000 X
790,914 X
12,000,000
1,000,000
Credit
1,300,000
1,092,649 X
890,914 X
13,000,000](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fd8b1b904-83d4-4026-8416-e8dd08763139%2F35be406f-2810-453e-8ba5-cc29e547c19d%2Fdp7452i_processed.png&w=3840&q=75)
Transcribed Image Text:Exercise 7-35 (Algo) Troubled debt restructuring [Appendix 7B]
At January 1, 2021, Clayton Hoists Inc. owed Third BancCorp $13 million, under a 10% note due December 31, 2022. Interest was paid
last on December 31, 2019. Clayton was experiencing severe financial difficulties and asked Third BancCorp to modify the terms of the
debt agreement. After negotiation Third BancCorp agreed to do the following: (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and
PVAD of $1) (Use appropriate factor(s) from the tables provided.):
●
Forgive the interest accrued for the year just ended.
Reduce the remaining two years' interest payments to $1 million each.
Reduce the principal amount to $12 million.
Required:
1-3. Prepare the journal entries by Third BancCorp necessitated by the restructuring of the debt at January 1, 2021, December 31, 2021
and December 31, 2022. (Enter your answers in whole dollars. If no entry is required for a transaction/event, select "No journal
entry required" in the first account field. Round your final answers to nearest whole dollar amount.)
No
1
2
3
4
Date
January 01, 2021 Bad debt expense
Interest receivable
December 31, 20 Cash
Bad debt expense
Interest revenue
December 31, 20 Cash
Bad debt expense
Interest revenue
December 31, 20 Cash
X Answer is not complete.
General Journal
Bad debt expense
Accounts receivable
**< 303 300
Debit
1,300,000 X
1,000,000
92,649 X
100,000 X
790,914 X
12,000,000
1,000,000
Credit
1,300,000
1,092,649 X
890,914 X
13,000,000
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