Sunland 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. Sunland Inc.'s $410,000, 11%, 10-year note was refinanced with a $410,000, 5%, 10-year note. Both notes require annual interest payments. (a) What is the accounting nature of this transaction? Troubled debt restructuring (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 0 decimal places e.g. 58,971. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Sunland 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. Sunland Inc.'s $410,000, 11%, 10-year note was refinanced with a $410,000, 5%, 10-year note. Both notes require annual interest payments. (a) What is the accounting nature of this transaction? Troubled debt restructuring (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 0 decimal places e.g. 58,971. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.)

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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