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Prepare journal entry record related to the restructuring

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Reference no: EM133182819

Question - On December 31, 2017 River City Bank entered a debt restructuring agreement with Bellinger Inc.  River City restructures a $4,000,000 loan receivable that was issued at par (no interest payments have been missed) by changing the following terms:

Reducing the principal obligation from $4,000,000 to $3,000,000.

Extending the maturity date from December 31, 2017 to December 31, 2022; and

Reducing the interest rate from 10% to 8%.

Bellinger determined that after the restructuring its new effective interest rate is 1.10975%.

Prepare the journal entry (if any) that Bellinger Inc. would record related to the restructuring on December 31, 2017.

Reference no: EM133182819

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