posted ACCT 401 final review- debt example

posted ACCT 401 final review- debt example - Megan( debtor)...

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Unformatted text preview: Megan( debtor) issued a $1000, 10%, 5 year note to Rob (creditor), EIR=12% on 1/1/01., with interest payable annual y on 12/31. Morgan's fiscal year ends on 12/31. It's easier to make the amortization table before you make journal entries. Also, to make life easier, we'l treat part 2, part 3, part 4 and part 5 independently. Creditor's amortization table 4)Carrying amount of note=previous 4) + 3) 1/1/2001 12/31/2001 12/31/2002 12/31/2003 12/31/2004 12/31/2005 Debtor's amortization table 4)Carrying amount of note=previous 4) + 3) 1/1/2001 12/31/2001 12/31/2002 12/31/2003 12/31/2004 12/31/2005 2)On 1/1/2003, Rob determined that it was probable Megan would only pay back $700 at maturity. to compare the current carrying amount with PV of the expected future cash inflow discounted at the historical EIR Required: Prepare the journal entries to record the impairment. Creditor: On 1/1/04, Megan asked Rob for a break due to her finanical dif iculties. Rob agreed to change the interest rate fromOn 1/1/04, Megan asked Rob for a break due to her finanical dif iculties....
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