Answer Happy

On December 31, 2020, Green Bank enters into a debt restructuring agreement with Skysong Inc., which is now experiencing financial trouble. The bank agrees to restructure a $1.4-million, 12% note receivable issued at par by the following modifications: 1. Reducing the principal obligation from $1.4 million to $1.12 million 2. Extending the maturity date from December 31, 2020, to December 31, 2023 3. Reducing the interest rate from 12% to 10% Skysong pays interest at the end of each year. On January 1, 2024, Skysong Inc. pays $1.12 million in cash to Green Bank for the principal. The market rate is currently 10%. Click here to view the factor table PRESENT VALUE OF 1. Click here to view the factor table PRESENT VALUE OF AN ANNUITY OF 1. Using (1) factor tables, (2) a financial calculator, or (3) Excel function PV, determine if Skysong can record a gain under this term modification. Calculate the gain if any. (For calculation purposes, use 5 decimal places as displayed in the factor table provided and Round final answer to O decimal places, e.g. 1,525.) Gain $
Prepare the journal entries to record the gain (if any) on Skysong's books. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.) Account Titles and Explanation Debit Credit
What interest rate should Skysong use to calculate its interest expense in future periods? Rate of intrest applied 10 % eTextbook and Media List of Accounts do
Prepare the amortization schedule of the note for Skysong after the debt restructuring. SKYSONG INC. INTEREST PAYMENT SCHEDULE AFTER DEBT RESTRUCTURING EFFECTIVE INTEREST RATE Cash Date Interest 12/31/20 12/31/21 $ 12/31/22 12/31/23 Total $ Touthookond Modi 140000 140000 140000 420000 Effective Interest $ $ 19986 18723 16542 55251 Reduction of Carrying Amount $ 120014 121277 123458 Carrying Amount of Note $
Prepare the interest payment entry for Skysong on December 31, 2021, 2022, and 2023. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.) Date Account Titles and Explanation Debit Credit Dec. 31, 2021 through 2023 eTextbook and Media List of Accounts What entry should Skysong make on January 1, 2024? (Credit account titles are automatically indented when the amount is entered. Do not indent manually. If no entry is required, select "No Entry" for the account titles and enter O for the amounts.) Date Account Titles and Explanation Debit Credit January 1, 2024