Prepare the journal entry to record the loss

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Reference no: EM132213955

Question: On December 31, 2017, the Sheridan 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, $ 2,800,000 note receivable by the following modifications:

1. Reducing the principal obligation from $ 2,800,000 to $ 1,860,000.

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 January 1, 2021, Barkley Company pays $ 1,860,000 in cash to Sheridan Bank.

Answer the following questions related to Sheridan Bank (creditor).

Prepare the journal entry to record the loss on Sheridan's books

Prepare the interest receipt schedule for Sheridan Bank after the debt restructuring.

Reference no: EM132213955

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