) On December 31, 2010, Bogoria Company is able to make its scheduled interest payment, but it is unable to pay the principal, which is due on that day. All National Bank agrees to restructure the $ 1,200,000, 12% note receivable issued at par by:

• making the new principal $ 750,000, payable in four years
• Lowering the interest rate to 10%, with the first payment due in one year.
• The present value of the restructured cash flows on December 31, 2010 (calculated using a market rate of 12%) is $ 704,440.

• Prepare any journal entry that Bogoria Company would record on December 31, 2011 (one year after the restructuring). (2 marks)
• Prepare any journal entry All National Bank would record on December 31, 2011. (3 marks)