Reference no: EM132324740
Exercise
On December 31, 2012, the American Bank enters into a debt restructuring agreement with Barkley Company, which is now experiencing financial trouble. The bank agrees to restructure a 13%, issued at par, $3,261,000 note receivable by the following modifications:
1. Reducing the principal obligation from $3,261,000 to $1,904,000.
2. Extending the maturity date from December 31, 2012, to January 1, 2016.
3. Reducing the interest rate from 13% to 10%.
Barkley pays interest at the end of each year. On January 1, 2016, Barkley Company pays $1,904,000 in cash to American Bank.
Using this information, and Assuming that the interest rate Culver should use to compute interest expense in future periods is 1.4276%, prepare the interest payment schedule of the note for Culver Company after the debt restructuring. How do you prepare the interest payment schedule.
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