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Libra Inc. issued a $300,000, 4-year, 10% note at par to KFH Bank on January 1, 2021. The note requires annual interest payments each December
Libra Inc. issued a $300,000, 4-year, 10% note at par to KFH Bank on January 1, 2021. The note requires annual interest payments each December 31. During 2021, Libra experiences financial difficulties, On lanuary 1, 2022, Libra negotiates a modification of the terms of the note. Under the modification, KFH agrees to the following: - Reduce the principal amount of the note to $250,000. - Extend the maturity date to January 1,2026. - Reduce the annual interest rate to 8% Libra's market interest rate at the time of the modification is 12%. The present value of 1 is 0.63552 and present value of an ordinary annuity is 3.03735 . Required: Prepare White's entries for: (A) The modification on January 1, 2022, and (B) The first interest payment date on December 31,2022
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