On December 31, 2025, American Bank enters into a debt restructuring agreement with Nash Company, which is now experiencing financial trouble. The bank agrees to restructure a 12%, issued at par, $4,020,000 note receivable by the following modifications: 1. Reducing the principal obligation from $4.020,000 to $3,216,000. 2. Extending the maturity date from December 31, 2025, to January 1, 2029. 3. Reducing the interest rate from 12% to 10% Nash pays interest at the end of each year. On January 1, 2029, Nash Company pays $3.216,000 in cash to American Bank.