Waterway Limited owes $ 310,000 to Larkspur Inc. on a 10-year, 10% note due on December 31, 2020. The note was issued at par. Because Waterway is in financial trouble, Larkspur Inc. agrees to extend the maturity date to December 31, 2022, reduce the principal to $ 260,000, and reduce the interest rate to 3%, payable annually on December 31. The market rate is currently 3%. Waterway prepares financial statements in accordance with IFRS. Using (1) factor tables, (2) a financial calculator, or (3) Excel function PV, prepare the journal entries on Waterways books on December 31, 2020, 2021, and 2022. (Hint: Refer to Chapter 3 for tips on calculating.)

Date Account Titles and Explanation Debit Credit