Prepare entries for the following: 1. The restructure on Short's books. 2. The restructure on Bryan's books. 3. Short's payment of interest on December 31, 2021.
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- Marmol Corporation uses the allowance method for bad debts. During 2019, Marmol charged 50,000 to bad debt expense and wrote off 45,200 of uncollectible accounts receivable. These transactions resulted in a decrease in working capital of: a. 0 b. 4,800 c. 45,200 d. 50,000Angelos Outlet used to report bad debt using the balance sheet method and is now switching to the income statement method. The percentage uncollectible will remain constant at 5%. Credit sales figures for 2019 were $866,000, and accounts receivable was $732,000. How much will Angelos Outlet report for 2019 bad debt estimation under the income statement method?Element Surfboards issued a $210,800 note on January 1, 2018 to a customer, Leona Marland, in exchange for merchandise. Terms of the note are 9-month maturity date on October 1, 2018 at a 10.2% annual interest rate. Leona Marland does not pay on her account and dishonors the note. On December 2, 2018, Element Surfboards decides to sell the dishonored note to a collection agency for 30% of its value. Record the journal entries for Element Surfboards for the following transactions. A. Initial sale on January 1, 2018 B. Dishonored note entry on October 1, 2018 C. Receivable sale on December 2, 2018
- Blue Cells Can contain On December 31, 2017, Short Co. is in financial difficulty and cannot pay a note due that day. It is a $2,000,000 face value note with $200,000 accrued interest payable to Bryan, Inc. The original market rate of interest on the note was 12.58613%. Bryan agrees to forgive the accrued interest, extend the maturity date (two years) to December 31, 2019, and reduce the interest rate to 4%. The present value of the restructured cash flows is $1,712,000 (using the original market rate). Do NOT add rows to the spreadsheet! Discount Cash Premium Interest payable Par Interest expense Discount on bond payable Yes Bonds payable No Loss on redemption Gain on redemptin Cash Interest payable Interest receivable Notes payable Gain on restructuring Loss on restructuring Discount on Note payable Premium on Note payable…On December 31, 2019, Guimary Corporation is experiencing extreme financial pressure and is in default in meeting interest payment on its long-term note of P6,000,000 due on December 31, 2019. The interest rate is 10% payable every December 31. In an agreement with the creditor, Guimary Corporation obtained the following changes in the terms of the note: The accrued interest of P600,000 on December 31, 2019 is forgiven. The principal is reduced by P1,000,000. The new interest rate is 12%. The new date of maturity is December 31, 2024. At the time of restructuring, the market rate of interest was 10%. What is Guimary Corporation's gain on debt restructuring? P1,979,180 P1,600,000 P1,221,020 a. b. c. d. POOn December 31, 2021, LOL Company is experiencing extreme financial pressure and is in default in meeting interest payment on its long-term note of P7,000,000 due on December 31, 2021. The interest rate is 10% payable every December 31. In an agreement with the creditor, LOL obtained the following changes in the terms of the note: * The accrued interest of P700,000 on December 31, 2021 is forgiven. The principal is reduced by P1,000,000. * The new interest rate is 8%. The new date of maturity is December 31, 2026. At the time of restructuring, the market rate of interest was 10%. What is LOL Company's gain on debt restructuring?
- During 2021, tesa Company experienced financial difficulties and is likely to default on a P5,000,000, 15% three year note dated January 1, 2019 payable to Bank of the Pasa Island. On December 31, 2021, the bank agreed to settle the note and unpaid interest of P750,000 for P4,100,000 cash payable on January 31, 2022. . What amount should be reported as gain from extinguishment of debt in 2021 balance sheet?On December 31 , 2018 Nicholas Co. is in financial difficulty and cannot pay a note due that day . It is a $3,300,000 8% issued at par note, payable to Key Bank. Key Bank agrees to accept from Nicholas equipment that has a fair value of 1,450,000, originally costing $2,400,000, with accumulated depreciation of $1,250,000. Key Bank also extends the maturity date to December 31, 2021, reduces the face amount of the note to $1,250,000, and reduces the interest rate to 6%, with interest payable at the end of each year. a. Nicholas should recognize a gain or loss on the transfer of the equipment of: b. At the end of each of the next three years Nicholas records the $ 75,000 interest paid to Key Bank as a: c. In determining the carrying value of the note at December 31, 2018 Key Bank uses an effective interest rate equal to: d. Key Bank records a loss on restructuring of: e. In recording the loss on restructuring, Key bank:On December 31, 2020, Short Co. is in financial difficulty and cannot pay a note due that day. It is a $2,000,000 note with $200,000 accrued interest payable to Bryan, Inc. Bryan agrees to forgive the accrued interest, reduce the principle balance due to $1,750,000, extend the maturity date to December 31, 2022, and reduce the interest rate to 4%. The present value of the restructured cash flows is $1,700,000. Instructions: Prepare entries for the following: 1. The restructure on Short's books. 2. The restructure on Bryan's books. 3. Short's payment of interest on December 31, 2021.
- During 2021, PUMPKIN Company experienced financial difficulties and is likely to default on a ₱5,000,000, 15% three-year note dated January 1, 2019, payable to Summit Bank. On December 31, 2021, the bank agreed to settle the note and unpaid interest of ₱750,000 for 2021 for ₱4,100,000 cash payable on January 31, 2022. What amount should PUMPKIN report as gain or loss from extinguishment of debt in its 2021 income statement? (If gain, maintain as is; if loss, put a negative (-) sign before the numerical figure) * ANSWER IN GOOD ACCOUNTING FORM. THANK YOU :)On December 31, 2019, GMC had a document payable with a value in the $ 100,000 books. GMC has faced economic difficulties that have not allowed to meet the payment of this debt. Suppose that on the date mentioned the The bank agreed to change the terms of the loan as follows: the principal (maturity value) was reduced to $ 80,000, the expiration date was changed to 31 December 2022, and the contractual interest rate was reduced from 15% to 10%. Determine the effect of this restructuring of debt on the Net Income of GMC on 12/31/19. to. GMC is going to report a profit of $ 20,000. b. GMC will report a profit equal to 5% of the principal. c. GMC is going to report a profit of $ 4,000. d. When the terms of the contract are adjusted, the debtor does NOT report earnings.At January 1, 2021, BB Industries, Inc., owed Second Bank $24 million, under a 10% note due December 31, 2022. Interest was paid last on December 31, 2019. BB was experiencing severe financial difficulties and asked Second Bank to modify the terms of the debt agreement. After negotiation Second Bank agreed to: Forgive the interest accrued for the year just ended, Reduce the remaining two years' interest payments to $2 million each and delay the first payment until December 31, 2022, and Reduce the principal amount to $22 million. Required:Prepare the journal entries by BB Industries, Inc. necessitated by the restructuring of the debt at January 1, 2021, December 31, 2022, and December 31, 2023.