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

FINANCIAL ACCOUNTING
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Chapter1: Financial Statements And Business Decisions
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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.
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
Prepare the interest receipt schedule for Swifty Bank after the debt restructuring. (Round answers to 0 decimal places, e.g. 38,548.)
Date
12/31/20 $
12/31/21
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%.
12/31/22
Total
12/31/23
S
Cash
Received
SWIFTY BANK
Interest Receipt Schedule After Debt Restructuring
Effective-Interest Rate
$
Interest
Revenue
$
Increase
in Carrying
Amount
Carry
Amour
Not
Transcribed Image Text:please provide the steps to the solutions. thank you! 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. 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 Prepare the interest receipt schedule for Swifty Bank after the debt restructuring. (Round answers to 0 decimal places, e.g. 38,548.) Date 12/31/20 $ 12/31/21 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%. 12/31/22 Total 12/31/23 S Cash Received SWIFTY BANK Interest Receipt Schedule After Debt Restructuring Effective-Interest Rate $ Interest Revenue $ Increase in Carrying Amount Carry Amour Not
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