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On December 31, 2003, the Marmaduke Bank enters into a debt restructuring agreement with Garfield Company, which is now experiencing financial trouble. The bank agrees to restructure a 10%, issued at par, $1,000,000 note receivable by the following modifications:

1. Reducing the principal obligation to $600,000

2. Extending the maturity date to 12/31/06

3. Reducing the interest rate to 8%

Prepare all entries for both parties, and discuss the interest rate assumed by the debtor after the restructuring.