Stellar Inc., is currently under protection of the U.S. bankruptcy court. As a "debtor in possession, the CEO has negotiated the following revised loan agreement with Alpha Bank. Stellar Inc.'s $400,000, 12%, 10-year note was refinanced with a $400,000, 5%, 10-year note. Both notes require annual interest payments. (a) What is the accounting nature of this transaction? (b) Prepare the journal entry to record this refinancing: (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answers to O decimal places eg. 58,971. If no entry is required, select "No Entry" for the acco titles and enter O for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.) (1) On the books of Stellar Inc. (2) On the books of Alpha Bank. No. Account Titles and Explanation 1. 2. Debit Credit
Stellar Inc., is currently under protection of the U.S. bankruptcy court. As a "debtor in possession, the CEO has negotiated the following revised loan agreement with Alpha Bank. Stellar Inc.'s $400,000, 12%, 10-year note was refinanced with a $400,000, 5%, 10-year note. Both notes require annual interest payments. (a) What is the accounting nature of this transaction? (b) Prepare the journal entry to record this refinancing: (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answers to O decimal places eg. 58,971. If no entry is required, select "No Entry" for the acco titles and enter O for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.) (1) On the books of Stellar Inc. (2) On the books of Alpha Bank. No. Account Titles and Explanation 1. 2. Debit Credit
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Question 2
Stellar Inc., is currently under protection of the U.S. bankruptcy court. As a "debtor in possession," the CEO has negotiated the following revised loan agreement with Alpha Bank. Stellar Inc.'s $400,000, 12%, 10-year note was
refinanced with a $400,000, 5%, 10-year note. Both notes require annual interest payments.
(a) What is the accounting nature of this transaction?
(b) Prepare the journal entry to record this refinancing: (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answers to O decimal places e.g. 58,971. If no entry is required, select "No Entry" for the accour
titles and enter O for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.)
(1)
(2)
No. Account Titles and Explanation
1.
On the books of Stellar Inc.
On the books of Alpha Bank.
2.
Debit
Credit
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