Reference no: EM132687897
At January 1, 2021, Borrower, Inc., was indebted to Lender Bank under a $600,000, 9% unsecured note. The note was signed January1, 2016, and was due December 31, 2023. Annual interest was last paid on December 31, 2019. Borrower was experiencing severe financial difficulties and negotiated a restructuring of the terms of the debt agreement.
a. As a result of negotiation, Lender Bank agreed to reduce the face of the note to $450,000, reduce last year's interest and the remaining three years' interest payments to $45,000 each and delay all payments until December 31, 2023, the maturity date.
Required:
Problem 1: Prepare the relevant journal entries for Borrower, Inc., necessitated by the restructuring of the debt beginning with January 1, 2021 and ending with the final payment on December 31
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