Question

At January 1, 2021, Brainard Industries, Inc., owed Second Bancorp $24 million under a 10% note due December 31, 2023. Interest was paid last on December 31, 2019. Brainard was experiencing severe financial difficulties and asked Second BancCorp to modify the terms of the debt agreement. After negotiation Second BancCorp agreed to a. Forgive the interest accrued for the year just ended b. Reduce the remaining two years Interest payments to $2 million each and delay the first payment until December 31, 2022 Reduce the unpaid principal amount to $22 million Required: Prepare the journal entries by Brainard Industries, Inc., necessitated by the restructuring of the debt at (1) January 1, 2021 (2) December 31, 2022; and (3) December 31, 2023. (Enter your answers in whole dollars. If no entry is required for a transaction/event, select "No journal entry required in the first account field.) View transaction arch

Answer 1

Analysis: Book value $24 Million +2.4 Million = 826400000 Future Paynuats :($2 Million X 2) + $22 Million --$26000000 Gain to Debtor = $400000 Date Jan 01 2021 Journal Entries General Journal Debit credit Interest Payable (100 x $ 2400000o) 2400000 Notes Parable (844 Million - 24 Million ) Gain to trouble dept 400000 restructeering 2000 000 Notes 2000000 Dec. 31, 2022 Payable Cash (revised "interest" onourt) 2.000000 Payable 2000000 Dec.31 Notu 2023 2000000 Cash (revised "interest amount) Notes Payable casi (reviseor "prinupo democut) 22000000 22000000