Reference no: EM13793485
At January 1, 2015, Bassugg Company owed Beaski Bank $6,000,000 under a 10% note due December 31, 2016. Interest was paid last on December 31, 2013. Bassugg was experiencing severe financial difficulties and asked Beaski Bank to modify the terms of the debt agreement. After negotiation Beaski Bank agreed to:
Forgive the interest accrued for the year just ended.
Reduce the remaining two years' interest payments to $500,000 each and delay the first payment until December 31, 2016, and
Reduce the principal amount to $5,500,000 million.
Instructions:
Prepare the journal entries by Bassugg Company required by the restructuring of the debt at each of the following dates:
a) January 1, 2015,
b) December 31, 2016, and
c) December 31, 2017.
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Required by the restructuring of the debt
: At January 1, 2015, Bassugg Company owed Beaski Bank $6,000,000 under a 10% note due December 31, 2016. Interest was paid last on December 31, 2013. Bassugg was experiencing severe financial difficulties and asked Beaski Bank to modify the terms of t..
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