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On December 31, 2020, Flounder Company borrowed $67,653 from Paris Bank, signing a 5-year, $114,000 zero-interest-bearing...

On December 31, 2020, Flounder Company borrowed $67,653 from Paris Bank, signing a 5-year, $114,000 zero-interest-bearing note. The note was issued to yield 11% interest. Unfortunately, during 2022, Flounder began to experience financial difficulty. As a result, at December 31, 2022, Paris Bank determined that it was probable that it would receive back only $85,500 at maturity. The market rate of interest on loans of this nature is now 12%.

1. Prepare the entry to record the issuance of the loan by Paris Bank on December 31, 2020.

2. Prepare the entry, if any, to record the impairment of the loan on December 31, 2022, by Paris Bank

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ekkarill92 answered 2 years ago
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