*E14-27B (Debtor/Creditor Entries for Modification of Troubled Debt) Vista Corp. owes $600,000 to First National. The debt is a 10-year, 10% note due December 31, 2014. Because Vista Corp. is in financial trouble, First National agrees to extend the matur

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*E14-27B (Debtor/Creditor Entries for Modification of Troubled Debt) Vista Corp. owes $600,000 to First National. The debt is a 10-year, 10% note due December 31, 2014. Because Vista Corp. is in financial trouble,  First National agrees to extend the maturity date to December 31, 2017, reduce the principal to $500,000, and reduce the interest rate to 6%, payable annually on December 31.

Instructions

(a) Prepare the journal entries on Vista’s books on December 31, 2014, 2015, 2016, 2017.

(b) Prepare the journal entries on First National’s books on December 31, 2014, 2015, 2016, 2017.

    • 10 years ago
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