176 nassau co owes dominion ltd 115 000 on a note payable plus 7 500 interest domini 4313688

176 nassau co owes dominion ltd 115 000 on a note payable plus 7 500 interest domini 4313688

176.Nassau Co. owes Dominion Ltd. $115,000 on a note payable, plus $7,500 interest. Dominion agrees to accept land in full settlement. The land is recorded on the books of Nassau at $55,600 and is currently worth $85,000.

?

Required:

?Prepare the journal entries to record the debt settlement on the books of Nassau.

177.Cat’s Eye, Inc. owes Brusters, Inc. $45,000 on a note payable, plus $3,250 interest. Bruster’s agrees to accept 1,000 shares of Cat’s Eye common stock in full settlement of the debt. The stock has a par value of $5 per share and a current market value of $45 a share.

?

Required:

?Record this debt restructuring on the books of Cat’s Eye.

178.On December 31, 2015, Albright Bank restructures an $800,000, 12% note receivable with $192,000 of accrued interest so that the new principal is $750,000, payable in four years at 10%. Present value factors for n = 4 years are:

Discount rate

PV of $1

PV of an annuity

10%

0.683013

3.169865

12%

0.635518

3.037350

Required:

a.

Prepare the journal entry to record the loss on restructuring.

b.

Prepare the journal entry to record the 2015 interest revenue.

c.

Compute the carrying value of the note on December 31, 2013.

d.

Compute the carrying value of the note on December 31, 2019 before the payment is received.

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