(L06) (Term Modification without GainCreditors Entries) Using the same information as in E14-22, answer the following questions...
Question:
(L06) (Term Modification without Gain—Creditor’s Entries) Using the same information as in E14-22, answer the following questions related to American Bank (creditor).
Instructions
(a) What interest rate should American Bank use to calculate the loss on the debt restructuring?
(b) Compute the loss that American Bank will suffer from the debt restructuring. Prepare the journal entry to record the loss.
(c) Prepare the interest receipt schedule for American Bank after the debt restructuring.
(d) Prepare the interest receipt entry for American Bank on December 31, 2019.
(e) What entry should American Bank make on January 1, 2021?
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