On January 1, 2013, Terminator, Inc.owed 9th National Bank $12 million on a 10% note due December 31, 2014.Interest was last paid on December 31, 2008.Terminator was experiencing severe financial difficulties and asked 9th National Bank to modify the terms of the debt agreement.After negotiation 9th National Bank agreed to:
- Forgive the interest accrued for the year just ended,
- Reduce the remaining two years interest payments to $900,000 each and delay the first payment until December 31, 2014, and
- Reduce the unpaid principal amount to $9,600,000.
Required:
Prepare the journal entries for Terminator, Inc.necessitated by the restructuring of the debt at (1) January 1, 2013, (2) December 31, 2014, and (3) December 31, 2012.

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The Answer of On January 1, 2013, Terminator, Inc.owed 9th National Bank $12 million on a 10% note due December 31, 2014.Interest was last paid on December 31, 2008.Terminator was experiencing severe financial difficulties and asked 9th National Bank to modify the terms of the debt agreement.After negotiation 9th National Bank agreed to:
- Forgive the interest accrued for the year just ended,
- Reduce the remaining two years interest payments to $900,000 each and delay the first payment until December 31, 2014, and
- Reduce the unpaid principal amount to $9,600,000.
Required:
Prepare the journal entries for Terminator, Inc.necessitated by the restructuring of the debt at (1) January 1, 2013, (2) December 31, 2014, and (3) December 31, 2012.