On January 1, 2019, Wolverine Corporation borrowed $1,450,000 by signing a note from Spartan City Bank. The stated interest rate on the note was 5%, payable annually. The note matures in 5 years, on 12/31/2023. On 12/31/2021, because of recent losses, Wolverines financial condition has deteriorated, and it is unable to pay the current interest payment of $72,500. Spartan City Bank determined that it would reduce the principal amount to $1,250,000, and waive (forgive) the current interest payment ($72,500). However, annual interest payments will continue to be paid over the 2 remaining years to the maturity date of 12/31/2023 (2 payments total), but will now be at 3% of the revised principal of $1,250,000.

Required (please show your work, and record your responses below):

4a. Provide the loan entry (borrowing) made by Wolverine on January 1, 2019.

4b. Determine the gain and prepare the entry to be recorded by Wolverine for this troubled debt restructuring on December 31, 2021 (given the information above).

4c. Determine the loss (or expense), and provide the entry made by Spartan City Bank for the restructure:

4d. Please provide the entry made by Spartan City Bank for interest income at the end of 2022 (show your work).