Exercise 14-24 On December 31, 2017, American Bank enters into a debt restructuring agreement with Indigo Company, which is now experiencing financial trouble. The bank agrees to restructure a 12%, issued at par, $2,500,000 note receivable by the following modifications: 1. Reducing the principal obligation from $2,500,000 to $1,650,000. 2. Extending the maturity date from December 31, 2017, to January 1, 2021. 3. Reducing the interest rate from 12% to 10%. Indigo pays interest at the end of each year. On January 1, 2021, Indigo Company pays $1,650,000 in cash to American Bank. Can Indigo Company record a gain under this term modification? If yes, compute the gain for Indigo Company. If no, enter amount as 0. The gain for Indigo Company Prepare the journal entries to record the gain on Indigo's books. (If no entry is required, select "No Entry" for the account titles and enter o for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.) Account Titles and Explanation Debit Credit LINK TO TEXT What interest rate should Indigo use to compute its interest expense in future periods? (Round answer to O decimal places, e.g. 18%.) The gain Prepare the interest payment schedule of the note for Indigo Company after the debt restructuring. INDIGO COMPANY Interest Payment Schedule After Debt Restructuring Effective-Interest Rate Reduction Carrying Cash Interest of Carrying Amount of Paid Expense Amount Note Date 12/31/17 12/31/18 12/31/19 12/31/20 Total Prepare the interest payment entries for Indigo Company on December 31, of 2018, 2019, and 2020. (If no entry is required, select "No Entry" for the account titles and enter o for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.) Debit Credit Date Account Titles and Explanation December 31, 2018 December 31, 2019 December 31, 2020