(Debtor/Creditor Entries for Modification of Troubled Debt) Vargo Corp. owes $270,000 to First Trust. The debt is...
Question:
(Debtor/Creditor Entries for Modification of Troubled Debt) Vargo Corp. owes $270,000 to First Trust. The debt is a 10-year, 12% notes due December 31, 2010. Because Vargo Corp. is in financial trouble, First Trust agrees to extend the maturity date to December 31, 2012, reduce the principal to $220,000, and reduce the interest rate to 5%, payable annually on December 31.
(a) Prepare the journal entries on Vargo’s books on December 31, 2010, 2011, 2012.
(b) Prepare the journal entries on First Trust’s books on December 31, 2010, 2011, 2012.
MaturityMaturity is the date on which the life of a transaction or financial instrument ends, after which it must either be renewed, or it will cease to exist. The term is commonly used for deposits, foreign exchange spot, and forward transactions, interest...
Step by Step Answer:
Because the carrying amount of the debt 270000 exceeds the total future cash f...View the full answer
Intermediate Accounting
ISBN: 978-0470423684
13th Edition
Authors: Donald E. Kieso, Jerry J. Weygandt, And Terry D. Warfield
Related Video
A journal entry is an act of keeping or making records of any transactions either economic or non-economic. Transactions are listed in an accounting journal that shows a company\'s debit and credit balances. The journal entry can consist of several recordings, each of which is either a debit or a credit
Students also viewed these Accounting questions
-
The Second Amendment to the U.S. Constitution states: A well regulated Militia, being necessary to the security of a free State, the right of the people to keep and bear Arms, shall not be infringed....
-
Vargo Limited owes $270,000 to First Trust Inc. on a 10-year, 12% note due on December 31, 2014. The note was issued at par. Because Vargo is in financial trouble, First Trust Inc. agrees to extend...
-
8) Camrey Company issued a five-year, interest-bearing note payable for $50,000 on January 1, 2013. Each January Camrey is required to pay $10,000 principal on the note. What is the amount that will...
-
1. Insurance Act, RSBC 1996 c226 Read Parts 1 and 2 of this statute and describe any changes to the standard commonlaw rules for contracts that you notice. 2. KP Pacific Holdings Ltd. and Churchland...
-
Draw a graph showing a firm that is operating at a loss in a perfectly competitive market. Be sure your graph includes the firm's demand curve, marginal revenue curve, marginal cost curve, average...
-
Auditors legal responsibilities differ significantly under the Securities Exchange Act of 1934 and the Securities Act of 1933. Briefly point out these differences and comment on why they exist. Also...
-
Rock Petroleum began operations in 2016 with the acquisition of four undeveloped leases, all individually significant. Give the entries assuming the following transactions. For simplicity, you may...
-
Tech, with a student population of 30,000, is located in a small college town in Virginia. Direct Cast Cable TV has a small service staff that is sufficient to handle installations and TV hookups for...
-
7. Tanla borrows $4100.00 for 9 years at 5.9% per annum, compounded semi-annually. How much Interest is paid over the life of the loan? (2 marks) 3 .8. Which is the better investment for 8 years?...
-
Create two tables based on the E-R model shown in Figure 4-41 and the business rules in the following list for a work order tracking database. Include all the constraints in the CREATE TABLE...
-
(Debtor/Creditor Entries for Settlement of Troubled Debt) Gottlieb Co. owes $199,800 to Ceballos Inc. The debt is a 10-year, 11% note Because Gottlieb Co is in financial trouble, Ceballos Inc. agrees...
-
(Analysis of Amortization Schedule and Interest Entries) The following amortization and interest schedule reflects the issuance of 10-year bonds by Capulet Corporation on January 1, 2004, and the...
-
Suppose we need to perform M percolateUps and N deleteMins on a d-heap that initially has N elements. a. What is the total running time of all operations in terms of M, N, and d? b. If d = 2, what is...
-
Compute the cost of the ending inventory and the cost of goods sold under FIFO, LIFO, and average-cost. (Round per unit cost to 3 decimal places, e.g. 15.647 and final answers to O decimal places,...
-
Air Quall Test Corporation provides on - site air quality testing services. The company provided the following cost formulas and actual results for the month of February: Fixed Component per Month...
-
a) Sims limited issued a 8% K350 million convertible debt on 1/1/2016 for a three year period. The bond is redeemable in the third year. The effective interest rate is 10%. You are required to...
-
Explain the principles of simulated moving bed (SMB) chromatography and its applications in large-scale chemical separation processes.
-
2. 3. Can you conclude from your example that all firms in all industries will favor bans on television advertising? Explain. Can you ever envision a situation where one firm might favor the ban and...
-
Briefly explain the difference between a Boolean operator and a relational (conditional) operator used in a selection expression for generalized audit software. Be sure to explain their different...
-
Representative data read from a plot that appeared in the paper Effect of Cattle Treading on Erosion from Hill Pasture: Modeling Concepts and Analysis of Rainfall Simulator Data (Australian Journal...
-
What inputs are required to assert the alarm output in Figure 3-37(b)? Figure 3-37 b A . C D 2 (b) N ALARM
-
Prior Companys condensed financial statements provide the following information. Instructions (a) Determine the following for 2014. (1) Current ratio at December 31. (2) Acid-test ratio at December...
-
Cedarville Company pays its office employee payroll weekly. Below is a partial list of employees and their payroll data for August. Because August is their vacation period, vacation pay is also...
-
Below is a payroll sheet for Otis Import Company for the month of September 2014. The company is allowed a 1% unemployment compensation rate by the state; the federal unemployment tax rate is 0.8%...
-
In the dividends-based valuation process discussed in the book and my notes, what does "continuing value" refer to? The value of dividends after the forecast horizon, which in book examples is...
-
The right side of the manufacturing overhead account Blank______. Multiple select question. will usually equal the left side of the account at the end of the year accumulates overhead costs as they...
-
when a practice recognizes and records revenue only when payments or cash are received by the practice and only recognizes and reports an expense when money is actually paid out, they are using what...
Study smarter with the SolutionInn App