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On December 31, 2020,BonitaCompany borrowed $71,214from Paris Bank, signing a 5-year, $120,000zero-interest-rate note. The note was issued to yield11% interest. Unfortunately, during 2022,Bonitabegan to experience
On December 31, 2020,BonitaCompany borrowed $71,214from Paris Bank, signing a 5-year, $120,000zero-interest-rate note. The note was issued to yield11% interest. Unfortunately, during 2022,Bonitabegan to experience financial difficulty. As a result, at December 31, 2022, Paris Bank determined that it was probable that it would collect only $90,000at maturity. The market rate of interest on loans of this nature is now12%.
a) Prepare the entry on March 31, 2023, if Paris learns thatBonitawill be able to repay the loan under the original terms.
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