Reference no: EM133025525
Question - On December 31, 2020, American Bank enters into a debt restructuring agreement with Bonita Company, which is now experiencing financial trouble. The bank agrees to restructure a 12%, issued at par, $2,110,000 note receivable by the following modifications:
1. Reducing the principal obligation from $2,110,000 to $1,688,000.
2. Extending the maturity date from December 31, 2020, to January 1, 2024.3.Reducing the interest rate from 12% to 10%.
Bonita pays interest at the end of each year. On January 1, 2024, Bonita Company pays $1,688,000 in cash to American Bank.
Assuming that the interest rate Bonita should use to compute interest expense in future periods is 1.4276%, prepare the interest payment schedule of the note for Bonita Company after the debt restructuring.(Round answers to 0 decimal places, e.g. 38,548.)
Prepare the interest payment entry for Bonita Company on December 31, 2022.
What entry should Bonita make on January 1, 2024?
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