Current Attempt in Progress Daniel Cullumber is the sole shareholder of Cullumber Inc., which is currently under bankruptcy court protection. As a debtor in possession, he has negotiated a revised loan agreement with United Bank. Cullumber Inc's $744,000, 10-year, 11% note issued at par was refinanced with a $744,000, 10-year, 6% note. Assume the market rate of interest is 11% at the refinancing date. Both Cullumber and United Bank prepare financial statements in accordance with IFRS 9. Click here to view the factor table PRESENT VALUE OF 1. Click here to view the factor table PRESENT VALUE OF AN ANNUITY OF 1. (b) Prepare the journal entries to record this refinancing (1) on the books of Cullumber and (2) on the books of United Bank. Assume for simplicity that United Bank had not previously recognized any impairment, although under the expected loss method it is likely that it would have recognized some loss. (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and final answer to O decimal places e.g. 58,971. Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. List all debit entries before credit entries.) No. Account Titles and Explanation (1) (2) Notes Payable Gain on Restructuring of Debt Notes Payable Modification Gain or Loss Notes Receivable Debit Credit
Current Attempt in Progress Daniel Cullumber is the sole shareholder of Cullumber Inc., which is currently under bankruptcy court protection. As a debtor in possession, he has negotiated a revised loan agreement with United Bank. Cullumber Inc's $744,000, 10-year, 11% note issued at par was refinanced with a $744,000, 10-year, 6% note. Assume the market rate of interest is 11% at the refinancing date. Both Cullumber and United Bank prepare financial statements in accordance with IFRS 9. Click here to view the factor table PRESENT VALUE OF 1. Click here to view the factor table PRESENT VALUE OF AN ANNUITY OF 1. (b) Prepare the journal entries to record this refinancing (1) on the books of Cullumber and (2) on the books of United Bank. Assume for simplicity that United Bank had not previously recognized any impairment, although under the expected loss method it is likely that it would have recognized some loss. (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and final answer to O decimal places e.g. 58,971. Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts. List all debit entries before credit entries.) No. Account Titles and Explanation (1) (2) Notes Payable Gain on Restructuring of Debt Notes Payable Modification Gain or Loss Notes Receivable Debit Credit
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Ee 181.
Transcribed Image Text:Current Attempt in Progress
Daniel Cullumber is the sole shareholder of Cullumber Inc., which is currently under bankruptcy court protection. As a debtor in
possession, he has negotiated a revised loan agreement with United Bank. Cullumber Inc's $744,000, 10-year, 11% note issued at par
was refinanced with a $744,000, 10-year, 6% note. Assume the market rate of interest is 11% at the refinancing date. Both Cullumber
and United Bank prepare financial statements in accordance with IFRS 9.
Click here to view the factor table PRESENT VALUE OF 1.
Click here to view the factor table PRESENT VALUE OF AN ANNUITY OF 1.
(b) Prepare the journal entries to record this refinancing (1) on the books of Cullumber and (2) on the books of United Bank. Assume
for simplicity that United Bank had not previously recognized any impairment, although under the expected loss method it is likely that
it would have recognized some loss. (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and final answer to O decimal
places e.g. 58,971. Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required,
select "No Entry" for the account titles and enter O for the amounts. List all debit entries before credit entries.)
No. Account Titles and Explanation
(1)
(2)
Notes Payable
Gain on Restructuring of Debt
Notes Payable
Modification Gain or Loss
Notes Receivable
Debit
Credit
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