What interest rate should Crane Bank use to calculate the loss on the debt restructuring? Interest rate List of Accounts 10 % Using (1) factor tables, (2) a financial calculator, or (3) Excel function PV, calculate the loss that Crane Bank will accrue under this new term modification. (Hint: Refer to Chapter 3 for tips on calculating.) Prepare the journal entry to record the loss on Crane Bank's books. (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and final answer to O decimal places e.g. 58,971. 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. List debit entry before credit entry.)
What interest rate should Crane Bank use to calculate the loss on the debt restructuring? Interest rate List of Accounts 10 % Using (1) factor tables, (2) a financial calculator, or (3) Excel function PV, calculate the loss that Crane Bank will accrue under this new term modification. (Hint: Refer to Chapter 3 for tips on calculating.) Prepare the journal entry to record the loss on Crane Bank's books. (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and final answer to O decimal places e.g. 58,971. 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. List debit entry before credit entry.)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question

Transcribed Image Text:On December 31, 2023, Crane Bank enters into a debt restructuring agreement with Troubled Inc., which is now experiencing
financial trouble. The bank agrees to restructure a $1.0-million, 10% note receivable issued at par by the following modifications:
1. Reducing the principal obligation from $1.0 million to $0.80 million
Extending the maturity date from December 31, 2023, to December 31, 2026
Reducing the interest rate from 10% to 9%
2.
3.
Troubled pays interest at the end of each year. On January 1, 2027, Troubled Inc. pays $0.80 million in cash to Crane Bank for the
principal. The market rate is currently 9%.
Answer the following questions related to Crane Bank (the creditor).
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.
What interest rate should Crane Bank use to calculate the loss on the debt restructuring?
Interest rate
List of Accounts
10 %
Using (1) factor tables, (2) a financial calculator, or (3) Excel function PV, calculate the loss that Crane Bank will accrue under this
new term modification. (Hint: Refer to Chapter 3 for tips on calculating.)
Prepare the journal entry to record the loss on Crane Bank's books. (Round present value factor calculations to 5 decimal places, e.g.
1.25124 and final answer to O decimal places e.g. 58,971. 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. List debit entry before
credit entry.)
Date Account Titles and Explanation
Dec 31,
2026
Debit
Credit
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