Question
Sarduchi Imports owes Radnor S&L $50 million under an 8% note with three years remaining to maturity. Due to financial difficulties of Sarduchi, the previous
Sarduchi Imports owes Radnor S&L $50 million under an 8% note with three years remaining to maturity. Due to financial difficulties of Sarduchi, the previous year's interest ($4 million) was not received. Radnor believes that the present value of all amounts it eventually will collect from Sarduchi is $25 million.
Required:
Compute the credit loss that the bank would record, and prepare a journal entry to record the credit loss as bad debt expense.
Note: If no entry is required for a transaction/event, select"No journal entry required" in the first account field. Enter your answers in millions.
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