On December 31, 2013, Short Co. is in financial difficulty and cannot pay a note due that day. It is a $1,000,000 note with $100,000 accrued interest payable to Bryan, Inc. Bryan agrees to forgive the accrued interest, extend the maturity date to December 31, 2015, and reduce the interest rate to 4%. The present value of the restructured cash flows is $856,000.
InstructionsPrepare entries for the following:
(a) The restructure on Short's books.
(b) The payment of interest on December 31, 2014.
(c) The restructure on Bryan's books.

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The Answer of On December 31, 2013, Short Co. is in financial difficulty and cannot pay a note due that day. It is a $1,000,000 note with $100,000 accrued interest payable to Bryan, Inc. Bryan agrees to forgive the accrued interest, extend the maturity date to December 31, 2015, and reduce the interest rate to 4%. The present value of the restructured cash flows is $856,000.
InstructionsPrepare entries for the following:
(a) The restructure on Short's books.
(b) The payment of interest on December 31, 2014.
(c) The restructure on Bryan's books.