On December 31, 2023, Crane Bank enters into a debt restructuring agreement with Troubled Inc., which is now experiencingfinancial 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 millionExtending the maturity date from December 31, 2023, to December 31, 2026Reducing 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 theprincipal. 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 rateList of Accounts10 %Using (1) factor tables, (2) a financial calculator, or (3) Excel function PV, calculate the loss that Crane Bank will accrue under thisnew 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. Donot indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. List debit entry beforecredit entry.)Date Account Titles and ExplanationDec 31,2026DebitCredit

The debt restructuring is the situation which arises when there has been any default or any other…

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.)

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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