1. Oriole Corp. owes $269,000 to First Trust. The debt is a 10-year, 12% note due December 31, 2022. Because Oriole Corp. is in financial trouble, First Trust agrees to extend the maturity date to December 31, 2024, reduce the principal to $207,000, and reduce the interest rate to 5%, payable annually on December 31. Orioles market rate of interest is 8%. Prepare the journal entries on Orioles books on December 31, 2022, 2023, and 2024. Remove the old note at face value and record the new note in the same journal entry.

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2.Kingbird AG issued a 90,000, 4-year, 9% note at face value to Flint Hills Bank on January 1, 2022, and received 90,000 cash. The note requires annual interest payments each December 31. During 2022, Kingbird experiences financial difficulties. On January 1, 2023, Kingbird negotiates a settlement of the note by issuing to Flint Hills Bank 20,000 1 par Kingbird ordinary shares. The ordinary shares have a market price of 4.40 per share on the date of the settlement.