First federal agreed to reduce last years interest

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At January 1, 2011, NCI Industries, Inc. was indebted to First Federal Bank under a $240,000, 10% unsecured note. The note was signed January 1, 2009, and was due December 31, 2012. Annual interest was last paid on December 31, 2009. NCI was experiencing severe financial difficulties and negotiated a restructuring of the terms of the debt agreement. First Federal agreed to reduce last year's interest and the remaining two years' interest payments to $11,555 each and delay all payments until December 31, 2012, the maturity date.

Required:

Prepare the journal entries by First Federal Bank necessitated by the restructuring of the debt at

1. January 1, 2011.
2. December 31, 2011.
3. December 31, 2012. 

Reference no: EM131001407

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