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Flashcards in 13 C Wrong Answers Deck (6):
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When calculating the present values of future cash flows of a restructured note, what is used for rate, Current effective rate of interest or annual interest rate?

Annual interest rate

1

What is the journal entry for the creditor restructuring the loan?

Bad debt exp. Xxx
Loan receivable. Xxx
Interest receivable. Xxx
Valuation allowance for loan impairment Xxx

2

What is the journal entry for the creditor of an interest payment received after a loan restructuring?

Cash. Xxx
Valuation allowance for loan impairment xxx
Interest income. Xxx

3

What is the creditors entry to record receipt of cash for note receivable in final year?

Cash. Xxx
Notes receivable Xxx

4

What is the debtors journal entry to record restructuring of the loan?

Notes payable. Xxx
Interest payable. Xxx
Gain on restructuring Xxx
Note payable. Xxx

5

What is the debtors journal entry to pay interest after debt restructuring?

Note payable. Xxx
Cash. Xxx