Daniel Perkins is the sole shareholder of Pearl Inc., which is currently under protection of the U.S. bankruptcy court. As a debtor in possession, he has negotiated the following revised loan agreement with United Bank. Pearl Inc.s $665,000, 11%, 10-year note was refinanced with a $665,000, 6%, 10-year note.

a) What is the accounting nature of this transaction? b) Prepare the journal entry to record this refinancing: c)On the books of Pearl Inc d)On the books of United Bank.