Question

PRINTER VERSION BACK NEXTH Your answer is partially correct. Try again. Marin Incorporated owes $126,000 to Ontarlo Bank Inc. on a two-year, 10% note due on December 31, 2020. The note was issued at par. Because Marin is in financial trouble, Ontario Benk agrees to extend the maturity date of the note to December 31, 2022, reduce the principal to $94,500, and reduce the interest rate to 8%, payable annualily on December 31. Present value of the new debt is calculated as $91,220. Marin prepares finandal statements in accordance with IFRS. Prepare the jourmal entries on Marin's books on each of December 31, 2020, 2021, and 2022. (Hound answers to o decimal places, eg. 5,275. Credit account titles are automatically Indented when the amount is entered. Do not indent manually. If ne entry la requlred, select "No Entry" for the account titles and enter O for the amounts. Record Journal entries In the order presented in the problem.) Date Account Titles and Explanation Debit Credit Dec. 31, 2020 lTNotes Payable 126000 Notes Payable 31500 Gain on Restructuring e 94500 Dec 31, 2021 Interest Expense Interest Payable Cash 12600 Dec. 31, 2022 Interest Expense Interest Payable 10080 Cash (To record payment of interest) 126000 Dec 31, 2022 Notes Payable 126000 Cash (To recerd maturity of note)

Answer 1

Journal Entries:

Date	Account title and explanation	Debit	Credit
Dec 31,2020	Notes payable	$126,000
	Notes payable		$91,220
	Gain on Restructuring of Notes payable		$34,780
	[To record restructuring of notes payable]
Dec 31,2021	Interest expense [91,220 x 10%]	$9,122
	Notes payable		$1,562
	Cash [94,500 x 8%]		$7,560
	[To record payment of interest]
Dec 31,2022	Interest expense [(91,220+1,562) x 10%]	$9,278
	Notes payable		$1,718
	Cash [94,500 x 8%]		$7,560
	[To record payment of interest]
Dec 31,2022	Notes payable	$94,500
	Cash		$94,500
	[To record maturity of note]