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What interest rate should barkley use to compute

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(Term Modification with Gain-Debtor's Entries) Use the same information as in E14-21 above except that American Bank reduced the principal to $1,900,000 rather than $2,400,000. On January 1, 2014, Barkley pays $1,900,000 in cash to American Bank for the principal.

(a) Can Barkley Company record a gain under this term modification? If yes, compute the gain forBarkley Company.

(b) Prepare the journal entries to record the gain on Barkley's books.

(c) What interest rate should Barkley use to compute its interest expense in future periods? Will your answer be the same as in E14-21 above? Why or why not?

(d) Prepare the interest payment schedule of the note for Barkley Company after the debt restructuring.

(e) Prepare the interest payment entries for Barkley Company on December 31, of 2011, 2012, and 2013.

(f) What entry should Barkley make on January 1, 2014?

Reference no: EM131106234

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