On December 31, 2020, American Bank enters into a debt restructuring agreement with Buffalo Company, which is now experiencing financial trouble. The bank agrees to restructure a 12%, issued at par, $2,540,000 note receivable by the following modifications: 1. Reducing the principal obligation from $2.540,000 to $2.032.000. Extending the maturity date from December 31, 2020, to January 1, 2024. Reducing the interest rate from 12% to 10%. 2 3. Buffalo pays interest at the end of each year. On January 1, 2024, Buffalo Company pays $2.032,000 in cash to American Bank
On December 31, 2020, American Bank enters into a debt restructuring agreement with Buffalo Company, which is now experiencing financial trouble. The bank agrees to restructure a 12%, issued at par, $2,540,000 note receivable by the following modifications: 1. Reducing the principal obligation from $2.540,000 to $2.032.000. Extending the maturity date from December 31, 2020, to January 1, 2024. Reducing the interest rate from 12% to 10%. 2 3. Buffalo pays interest at the end of each year. On January 1, 2024, Buffalo Company pays $2.032,000 in cash to American Bank
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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