Question
The Chmelik Company is delinquent on a $100,000, 12% note plus $20,000 accrued interest to the Hollywood National Bank. The note was due on June
The Chmelik Company is delinquent on a $100,000, 12% note plus $20,000 accrued interest to the Hollywood National Bank. The note was due on June 1, 2016. On June 2, 2016, the bank agrees
to restructure the debt by forgiving the accrued interest, reducing the face value of the note to $90,000,
reducing the interest rate to 7%, and extending the maturity date to June 1, 2019. The interest is due
each year on June 1.
Required: Prepare the journal entries for Chmelik Company to record the restructuring on June 2, 2016, and the
payment of interest on June 1, 2017.
ANSWER:
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Accounting And Auditing Research Tools And Strategies
Authors: Thomas R. Weirich, Thomas C. Pearson, Natalie Tatiana Churyk
10th Edition
1119698138, 9781119698135
