On January 1, 2020, Franklin Company has a 6% bank loan with principal of $1,000,000 and accrued interest of $30,000. The loan plus interest is currently due. Franklin cannot make the required payment, and the bank agrees to restructure the loan to improve collectability. The bank modifies the terms as follows: cancel $230,000 of the total debt owed, extend the due date for the remaining debt for 2 years, to December 31, 2021, and reduce the interest rate to 2%, with interest to be paid annually on December 31, 2020 and December 31, 2021.
Required
The transaction qualifies as a troubled debt restructuring. Prepare the entries needed on Franklin's books to:
a. Record the restructuring on January 1, 2020.
b. Make the interest payment on December 31, 2020.
c. Make the interest and principal payment on December 31, 2021.

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The Answer of On January 1, 2020, Franklin Company has a 6% bank loan with principal of $1,000,000 and accrued interest of $30,000. The loan plus interest is currently due. Franklin cannot make the required payment, and the bank agrees to restructure the loan to improve collectability. The bank modifies the terms as follows: cancel $230,000 of the total debt owed, extend the due date for the remaining debt for 2 years, to December 31, 2021, and reduce the interest rate to 2%, with interest to be paid annually on December 31, 2020 and December 31, 2021.
Required
The transaction qualifies as a troubled debt restructuring. Prepare the entries needed on Franklin's books to:
a. Record the restructuring on January 1, 2020.
b. Make the interest payment on December 31, 2020.
c. Make the interest and principal payment on December 31, 2021.

On January 1, 2020, Franklin Company Has a 6% Bank