On December 31, 2020, Short Co. is in financial difficulty and cannot pay a note due that day. It is a $2,000,000 note with $200,000 accrued interest payable to Bryan, Inc. Bryan agrees to forgive the accrued interest, reduce the principle balance due to $1,750,000, extend the maturity date to December 31, 2022, and reduce the interest rate to 4%. The present value of the restructured cash flows is $1,700,000. Instructions: Prepare entries for the following: 1. The restructure on Short's books. 2. The restructure on Bryan's books. 3. Short's payment of interest on December 31, 2021.

On December 31, 2020, Short Co. is in financial difficulty and cannot pay a note due that day. It is a $2,000,000 note with $200,000 accrued interest payable to Bryan, Inc. Bryan agrees to forgive the accrued interest, reduce the principle balance due to $1,750,000, extend the maturity date to December 31, 2022, and reduce the interest rate to 4%. The present value of the restructured cash flows is $1,700,000. Instructions: Prepare entries for the following: 1. The restructure on Short's books. 2. The restructure on Bryan's books. 3. Short's payment of interest on December 31, 2021.

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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