Stellar Inc., is currently under protection of the U.S. bankruptcy court. As a "debtor in possession, the CEO has negotiated the following revised loan agreement with Alpha Bank. Stellar Inc.'s $400,000, 12%, 10-year note was refinanced with a $400,000, 5%, 10-year note. Both notes require annual interest payments. (a) What is the accounting nature of this transaction? (b) Prepare the journal entry to record this refinancing: (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answers to O decimal places eg. 58,971. If no entry is required, select "No Entry" for the acco titles and enter O for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.) (1) On the books of Stellar Inc. (2) On the books of Alpha Bank. No. Account Titles and Explanation 1. 2. Debit Credit
Stellar Inc., is currently under protection of the U.S. bankruptcy court. As a "debtor in possession, the CEO has negotiated the following revised loan agreement with Alpha Bank. Stellar Inc.'s $400,000, 12%, 10-year note was refinanced with a $400,000, 5%, 10-year note. Both notes require annual interest payments. (a) What is the accounting nature of this transaction? (b) Prepare the journal entry to record this refinancing: (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and the final answers to O decimal places eg. 58,971. If no entry is required, select "No Entry" for the acco titles and enter O for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.) (1) On the books of Stellar Inc. (2) On the books of Alpha Bank. No. Account Titles and Explanation 1. 2. Debit Credit
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
Chapter13: Investments And Long-term Receivables
Section: Chapter Questions
Problem 26P: (Appendix 13.1) Derivatives Danburg. Company has a 5 million, 9% bank loan outstanding with its...
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