On December $31,2025,$ American Bank enters into a debt restructuring agreement with Marigold Company, which is now experiencing financial trouble. The bank agrees to restructure a $12\%,$ issued at par, $$3,250,000$ note receivable by the following modifications:

Reducing the principal obligation from $$3,250,000$ to $$2,600,000.$

Extending the maturity date from December $31,2025,$ to January $1,2029.$

Reducing the interest rate from $12\%$ to $10\%.$

Marigold pays interest at the end of each year. On January $1,2029,$ Marigold Company pays $$2,600,000$ in cash to American Bank.