Prepare the interest payment schedule of the note

Assignment Help Accounting Basics

Reference no: EM132213956

Question: On December 31, 2017, American Bank enters into a debt restructuring agreement with Larkspur 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, 2017, to January 1, 2021.

3. Reducing the interest rate from 12% to 10%.

Larkspur pays interest at the end of each year. On January 1, 2021, Larkspur Company pays $ 2,920,000 in cash to American Bank.

- Prepare the journal entries to record the gain on Larkspurâ€^TMs books.

- What interest rate should Larkspur use to compute its interest expense in future periods?

- Prepare the interest payment schedule of the note for Larkspur Company after the debt restructuring.for 12/31/17, 12/31/18, 12/31/19. 12/31/20

Reference no: EM132213956

Questions Cloud

How did the change in journal entries affect the net income : Mr. Kenny is an accountant at AF Textile, and he plays squash with Mr. Zuni, the CEO of AF Textile. The CEO wanted to decrease net income with the objective.

How does the employer promote its fringe benefit : How does the employer promote its fringe benefit and cafeteria plan packages? Compare and contrast at least two different employment opportunities.

Compute the cost of each model assembled in november : S. Lee Enterprises uses operations costing and assigns conversion costs based on the number of units assembled. Compute cost of each model assembled in November

Make realistic assumptions about any missing data : Complete the Hair's Form 1040A and the Qualified Dividends and Capital Gain Tax Worksheet. Make realistic assumptions about any missing data.

Prepare the interest payment schedule of the note : On December 31, 2017, American Bank enters into a debt restructuring agreement with Larkspur Company, which is now experiencing financial trouble.

Prepare the journal entry to record the loss : On December 31, 2017, the Sheridan Bank enters into a debt restructuring agreement with Barkley Company, which is now experiencing financial trouble.

Explain what you think went wrong : Dr. Jakob Nielsen has said that mobile CX is an oxymoron. In order to determine whether you agree with his statement, think of one instance of excellent mobile.

Determine the cash value of hershey company : Determine the Cash Value of Hershey Company Purpose It is simply good business to continually know the cash value (corporate valuation) of your company

Prepare any note disclosures and adjusting journal entries : Prepare any note disclosures and adjusting journal entries that are needed in the 2018 financial statements for each situation.

User Account

All Pages