Long term liabilities

The Perry National Bank has a note receivable of $30,000,000 from the Mogren Company that it is carrying at face value and is due on December 31, 2013. Interest on the note is payable at 8% each December 31. The last interest Mogren Company paid was on December 31, 2011 and Mogren has financial difficulty in meeting the payment obligations. On January 1, 2013, the company asked the bank to modify the terms of the note because of its financial difficulties. After negotiation the bank agreed to: 1) Forgive the interest accrued for the year 2012. 2) Reduce the stated interest rate to 6%. 3) Reduce the unpaid principal amount to $22 million and to be repaid at the end of 2014. 4) Assume the effective interest rate for Mogren Company at the time of the restructuring remains at 10%.

Required: Prepare the journal entries by Mogren Company necessitated by the restructuring of the debt on January 1, 2013, Dec 31, 2013, and December 31, 2014.