On December 31, 2020, American Bank enters into a debt restructuring agreement with Shamrock Company, which is now experiencing financial trouble. The bank agrees to restructure a 12%, issued at par, $3,760,000 note receivable by the following modifications: 1. Reducing the principal obligation from $3,760,000 to $3,008,000. 2. Extending the maturity date from December 31, 2020, to January 1, 2024. 3. Reducing the interest rate from 12% to 10%. Shamrock pays interest at the end of each year. On January 1, 2024, Shamrock Company pays $3,008,000 in cash to American Bank. Assuming that the interest rate Shamrock should use to compute interest expense in future periods is 1.4276%, prepare the interest payment schedule of the note for Shamrock Company after the debt restructuring. (Round answers to 0 decimal places, e.g. 38,548.) SHAMROCK COMPANY Interest Payment Schedule After Debt Restructuring Effective-Interest Rate Date Cash Paid Interest Expense Reduction of Carrying Amount Carrying Amount of Note 12/31/20 $ $ $ $ 12/31/21 12/31/22 12/31/23 Total $ $ $ Prepare the interest payment entry for Shamrock Company on December 31, 2022. (Round answers to 0 decimal places, e.g. 38,548. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit December 31, 2022 What entry should Shamrock make on January 1, 2024? (Round answers to 0 decimal places, e.g. 38,548. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.) Date Account Titles and Explanation Debit Credit December 31, 2024
On December 31, 2020, American Bank enters into a debt restructuring agreement with Shamrock Company, which is now experiencing financial trouble. The bank agrees to restructure a 12%, issued at par, $3,760,000 note receivable by the following modifications:
| 1. |
Reducing the principal obligation from $3,760,000 to $3,008,000. | |
| 2. | Extending the maturity date from December 31, 2020, to January 1, 2024. | |
| 3. | Reducing the interest rate from 12% to 10%. |
Shamrock pays interest at the end of each year. On January 1, 2024, Shamrock Company pays $3,008,000 in cash to American Bank.
Assuming that the interest rate Shamrock should use to compute interest expense in future periods is 1.4276%, prepare the interest payment schedule of the note for Shamrock Company after the debt restructuring. (Round answers to 0 decimal places, e.g. 38,548.)
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SHAMROCK COMPANY
Interest Payment Schedule After Debt Restructuring Effective-Interest Rate |
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Date |
Cash Paid |
Interest Expense |
Reduction
of Carrying Amount |
Carrying
Amount of Note |
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| 12/31/20 | $ | $ | $ | $ | ||||
| 12/31/21 | ||||||||
| 12/31/22 | ||||||||
| 12/31/23 | ||||||||
| Total | $ | $ | $ |
Prepare the interest payment entry for Shamrock Company on December 31, 2022. (Round answers to 0 decimal places, e.g. 38,548. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.)
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Date
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Account Titles and Explanation
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Debit
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Credit
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December 31, 2022
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What entry should Shamrock make on January 1, 2024? (Round answers to 0 decimal places, e.g. 38,548. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.)
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Date
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Account Titles and Explanation
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Debit
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Credit
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December 31, 2024
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