Chapter 13, Problem 13.11BE

Rothschild Chair Company, was indebted to First Lincoln Bank under a $20 million, 10% unsecured note. The note was signed January 1, 2011, and was due December 31, 2024. Annual interest was paid on December 31, 2019. At January 1, 2021, Rothschild Chair Company was experiencing severe financial difficulties and negotiated a restructuting of the terms of the debt agreement. REQUIRED: Prepare all journal entries by First Lincoln Bank to record the restructuring and any remaining transactions, for current and future years, relating to the debt under each of the independent circumstances below: 1.-First Linconl Bank agreed to settle the debt in exchange for land having a fair value of $16 million but carried on Rothschild Chair company's book at $13 million 2.-First Lincoln Bank agreed to a) forgive the interest accrued from last year, b) reduce the remaining four interest payments to $1 million each, and c) reduce the principal to $15 million

Mana Company had P5,000,000 note payable due on March 1, 2020. The entity borrowed P3,500,000 on February 1, 2020 which had a five-year term and used the proceeds to pay down the note and used other cash to pay the balance. The December 31, 2019 financial statements were issued on March 31, 2020. What amount of the note payable should be classified as noncurrent on December 31, 2019?

On December 31, 2020, American Bank enters into a debt restructuring agreement with Barkley Company, which is now experiencing financial trouble. The bank agrees to restructure a 12%, issued at par, $3,000,000 note receivable by the following modifications: 1.   Reducing the principal obligation from $3,000,000 to $2,400,000. 2.   Extending the maturity date from December 31, 2020, to January 1, 2024. 3.   Reducing the interest rate from 12% to 10%. Barkley pays interest at the end of each year. On January 1, 2024, Barkley Company pays $2,400,000 in cash to American Bank. Instructions a.    Will the gain recorded by Barkley be equal to the loss recorded by American Bank under the debt restructuring? Explain. b.    Can Barkley Company record a gain under the term modification mentioned above? Explain. c.    Assuming that the interest rate Barkley should use to compute interest expense in future periods is 1.4276%, prepare the interest payment schedule of the note for Barkley Company…

Star, Inc. is a manufacturer and retailer of household furniture.  Your audit of the company's financial statements for the year ended December 31, 2018, discloses the following debt obligations of the company at the end of its reporting period.  Star's financial statements are authorized for issuance on March 6, 2019. A P150,000 short-term obligation due on March 1, 2019.  Its maturity could be extended to March 1, 2021 provided Star agrees to provide additional collateral.  On February 12, 2019, an agreement is reached to extend the loan's maturity to March 1, 2021. A short-term obligation of P3,600,000 in the form of notes payable due February 5, 2019.  The company issued 75,000 ordinary shares for P36 per share on January 25, 2019.  The proceeds from the issuance, plus P900,000 cash, were used to fully settle the debt on February 5, 2019. A long-term obligation of P2,500,000 due December 1, 2028.  On November 10, 2018, Star breaches a covenant on its debt obligation and the loan…

Tamarisk Company in its first year of operations provides the following information related to one of its available-for-sale debt securities at December 31, 2020. Amoortization cost $52,100 Fair Value  44,200 Expected credit losses  12,850   What is the amount of the credit loss that Tamarisk should report on this available-for-sale security at December 31, 2020? Prepare the journal entry to record the credit loss, if any (and any other adjustment needed), at December 31, 2020. Assume that the fair value of the available-for-sale security is $57,200 at December 31, 2020, instead of $44,200. What is the amount of the credit loss that Tamarisk should report at December 31, 2020? Assume the same information as for part (c). Prepare the journal entry to record the credit loss, if necessary (and any other adjustment needed), at December 31, 2020.

On December 31, 2020, American Bank enters into a debt restructuring agreement with Flint Company, which is now experiencing financial trouble. The bank agrees to restructure a  12%, issued at par, $ 2,110,000 note receivable by the following modifications: 1.   Reducing the principal obligation from $ 2,110,000 to $ 1,688,000. 2.   Extending the maturity date from December 31, 2020, to January 1, 2024. 3.   Reducing the interest rate from  12% to  10%. Flint pays interest at the end of each year. On January 1, 2024, Flint Company pays $ 1,688,000 in cash to American Bank.   Assuming that the interest rate Flint should use to compute interest expense in future periods is 1.4276%, prepare the interest payment schedule of the note for Flint Company after the debt restructuring. (Round answers to 0 decimal places, e.g. 38,548.)Assuming that the interest rate Flint should use to compute interest expense in future periods is 1.4276%, prepare the interest payment schedule of the…

ABC Company has a P15,000,000, two-year note payable to  DEF  that matures October 31, 2021. ABC's management intends to refinance the note for an additional three years and is negotiating a financing agreement with DEF. In order to exclude this note from current liabilities on its December 31, 2020, balance sheet, ABC Company must     a.pay off the note and complete the refinancing before the 2020 financial statements are issued b.demonstrates an ability to refinance before the 2019 financial statements are issued c.complete the refinancing agreement before December 31,2020. d.complete the refinancing agreement before October 31,2021.

On December 31, 2019, Kale Bank entered into a debt restructuring agreement with Miserable Corp., which was experiencing financial difficulties. A note for P1,000,000 and one year's accrued interest was due on this date from Miserable.  The note receivable from Miserable was restructured as follows: reduced the principal obligation to P700,000. forgave the P120,000 of accrued interest for 2019. extended the maturity date to December 31, 2022. reduced the interest rate to 8%. Interest is payable annually on December 31, beginning 2020.   How much interest income should Kale Bank report for the year ended December 31, 2020? Group of answer choices Nil P56,000 P64,258 P75,931

Wildhorse Co. issued a five-year interest-bearing note payable for $324000 on January 1, 2019. Each January the company is required to pay $65000 on the note. How will this note be reported on the December 31, 2020, balance sheet?