Present value of 2,920,000 in 3 years 12% = 2,920,000 * 0.71178 = 2,078,398
Present value of interest = 2920000 * 10% * 2.40183 = 701,334
Loss on debt restructuring = 4,300,000 - 2,078,398 - 701,334 = 1,520,268
DR. | CR. | |
Bad debt expense | 1,520,268 | |
Allowance for doubtful accounts | 1,520,268 |
Exercise 14-25 (Part Level Submission) On December 31, 2017, the Ayayai Bank enters into a debt...
Exercise 14-25 (Part Level Submission) On December 31, 2020, Pronghorn 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, $2,500,000 note receivable by the following modifications: 1. Reducing the principal obligation from $2,500,000 to $1,650,000. 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...
Exercise 14-23 (Part Level Submission) On December 31, 2017, the Pina 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, $3,800,000 note receivable by the following modifcations: 1. Reducing the principal obligation from $3,800,000 to $3,040,000 2. Extending the maturity date from December 31, 2017, to January 1, 2021 3. Reducing the interest rate from 12% to 10%, Barkley pays interest at the...
Exercise 14-23
On December 31, 2017, the Shamrock 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, $3,700,000 note receivable by the following
modifications:
1.
Reducing the principal obligation from $3,700,000 to
$2,960,000.
2.
Extending the maturity date from December 31, 2017, to January
1, 2021.
3.
Reducing the interest rate from 12% to 10%.
Barkley pays interest at the end of each...
On December 31, 2020, Oriole 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, $4,300,000 note receivable by the following modifications: 1. Reducing the principal obligation from $4,300,000 to $2,920,000, 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...
Exercise 14-23 On December 31, 2017, the Indigo 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, $3,700,000 note receivable by the following modifications: 1. Reducing the principal obligation from $3,700,000 to $2,960,000. 2. Extending the maturity date from December 31, 2017, to January 1, 2021. 3. Reducing the interest rate from 12% to 10%. Barkley pays interest at the end of each...
On December 31, 2017, the Sarasota 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, $4,100,000 note receivable by the following modifications: 1. Reducing the principal obligation from $4,100,000 to s2,780,000. 2. Extending the maturity date from December 31, 2017, to January 1, 2021. 3. Reducing the interest rate from 12% to 10%. Barkley pays interest at the end of each year. On...
Exercise 14-23 (Part Level Submission)
On December 31, 2020, Cullumber 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, $3,900,000 note receivable by the following
modifications:
1.
Reducing the principal obligation from $3,900,000 to
$3,120,000.
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...
Exercise 14-23 On December 31, 2017, the Indigo 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, $3,700,000 note receivable by the following modifications: 1. Reducing the principal obligation from $3,700,000 to $2,960,000. 2. Extending the maturity date from December 31, 2017, to January 1, 2021. 3. Reducing the interest rate from 12% to 10%. Barkley pays interest at the end of each...
Exercise 14-23 (Part Level Submission)
On December 31, 2020, Cullumber 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, $3,900,000 note receivable by the following
modifications:
1.
Reducing the principal obligation from $3,900,000 to
$3,120,000.
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...
Exercise 14-23 (Part Level Submission)
On December 31, 2020, Cullumber 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, $3,900,000 note receivable by the following
modifications:
1.
Reducing the principal obligation from $3,900,000 to
$3,120,000.
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...