On December 31, 2020, Bridgeport Company borrowed $69,348 from Paris Bank, signing a 5-year, $106,700 zero-interest-bearing note.
Question:
On December 31, 2020, Bridgeport Company borrowed $69,348 from Paris Bank, signing a 5-year, $106,700 zero-interest-bearing note. The note was issued to yield 9% interest. Unfortunately, during 2022, Bridgeport began to experience financial difficulty. As a result, at December 31, 2022, Paris Bank determined that it was probable that it would receive back only $80,025 at maturity. The market rate of interest on loans of this nature is now 10%.
Prepare the entry to record the issuance of the loan by Paris Bank on December 31, 2020. (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and final answers to 0 decimal places, e.g. 5,275. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually.)
Date | Account Titles and Explanation | Debit | Credit |
Dec. 31, 2020 | |||
List of Accounts
Prepare the entry, if any, to record the impairment of the loan on December 31, 2022, by Paris Bank. (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and final answers to 0 decimal places, e.g. 5,275. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually.)
Date | Account Titles and Explanation | Debit | Credit |
Dec. 31, 2022 | |||
Intermediate Accounting
ISBN: 978-1119503668
17th edition
Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfiel