At January 1, 2021. Clayton Hoists Inc. owed Third BancCorp $12 million, under a 10% note due December 31, 2022. Interest was paid last on December 31, 2019. Clayton was experiencing severe financial difficulties and asked Third BancCorp to modify the terms of the debt agreement. After negotiation Third BancCorp agreed to do the following: • Forgive the interest accrucd for the year just ended. • Reduce the remaining two years' interest payments to $1 million each, Reduce the principal amount to $11 million. Required: Prepare the journal entries by Third BancCorp necessitated by the restructuring of the debt at 1. January 1, 2021. 2. December 31, 2021. 3. December 31. 2022.
At January 1, 2021. Clayton Hoists Inc. owed Third BancCorp $12 million, under a 10% note due December 31, 2022. Interest was paid last on December 31, 2019. Clayton was experiencing severe financial difficulties and asked Third BancCorp to modify the terms of the debt agreement. After negotiation Third BancCorp agreed to do the following: • Forgive the interest accrucd for the year just ended. • Reduce the remaining two years' interest payments to $1 million each, Reduce the principal amount to $11 million. Required: Prepare the journal entries by Third BancCorp necessitated by the restructuring of the debt at 1. January 1, 2021. 2. December 31, 2021. 3. December 31. 2022.
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter14: Financing Liabilities: Bonds And Long-term Notes Payable
Section: Chapter Questions
Problem 30E
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