On December 31, 2020, Pina Company signed a $1,056,300 note to Grouper Bank. The market interest...

On December 31, 2020, Pina Company signed a $1,056,300 note to Grouper Bank. The market interest rate at that time was 11%. The stated interest rate on the note was 9%, payable annually. The note matures in 5 years. Unfortunately, because of lower sales, Pina’s financial situation worsened. On December 31, 2022, Grouper Bank determined that it was probable that the company would pay back only $633,780 of the principal at maturity. However, it was considered likely that interest would continue to be paid, based on the $1,056,300 loan.

1. Determine the amount of cash Pina received from the loan on December 31, 2020. (Round present value factors to 5 decimal places, e.g. 0.52513 and final answer to 0 decimal places, e.g. 5,275.)

2. Determine the loss on impairment that Grouper Bank should recognize on December 31, 2022. (Round present value factors to 5 decimal places, e.g. 0.52500 and final answer to 0 decimal places, e.g. 5,275.)

Expert Solution

Above figures have been calculated in the following manner:

ekkarill92 answered 2 years ago

On December 31, 2020, Teal Company signed a $1,022,000 note to Flint Bank. The market interest...

On December 31, 2020, Teal Company signed a $1,022,000 note to Flint Bank. The market interest rate at that time was 11%. The stated interest rate on the note was 9%, payable annually. The note matures in 5 years. Unfortunately, because of lower sales, Teal’s financial situation worsened. On December 31, 2022, Flint Bank determined that it was probable that the company would pay back only $613,200 of the principal at maturity. However, it was considered likely that interest would...

On December 31, 2020, Teal Company signed a $1,137,500 note to Flint Bank. The market interest...

On December 31, 2020, Teal Company signed a $1,137,500 note to Flint Bank. The market interest rate at that time was 12%. The stated interest rate on the note was 10%, payable annually. The note matures in 5 years. Unfortunately, because of lower sales, Teal’s financial situation worsened. On December 31, 2022, Flint Bank determined that it was probable that the company would pay back only $682,500 of the principal at maturity. However, it was considered likely that interest would...

On December 31, 2017, Sage Company signed a $1,022,000 note to Pronghorn Bank. The market interest...

On December 31, 2017, Sage Company signed a $1,022,000 note to Pronghorn Bank. The market interest rate at that time was 11%. The stated interest rate on the note was 9%, payable annually. The note matures in 5 years. Unfortunately, because of lower sales, Sage’s financial situation worsened. On December 31, 2019, Pronghorn Bank determined that it was probable that the company would pay back only $613,200 of the principal at maturity. However, it was considered likely that interest would...

On December 31, 2017, Flint Company signed a $ 1,038,100 note to Buffalo Bank. The market...

On December 31, 2017, Flint Company signed a $ 1,038,100 note to Buffalo Bank. The market interest rate at that time was 11%. The stated interest rate on the note was 9%, payable annually. The note matures in 5 years. Unfortunately, because of lower sales, Flint’s financial situation worsened. On December 31, 2019, Buffalo Bank determined that it was probable that the company would pay back only $ 622,860 of the principal at maturity. However, it was considered likely that interest...

On October 31, 2015, a company signed a note for $50,000 with a bank. The terms...

On October 31, 2015, a company signed a note for $50,000 with a bank. The terms were 10% for 9 months. On December 31, 2015, adjusting entries are recorded. What is the correct adjusting entry for this event Group of answer choices Debit Interest Expense and credit Interest Payable for $833.33. . Debit Interest Expense and credit Notes Payable for $833.33. Debit Interest Payable and credit Interest Expense for $3,750. Debit Interest Expense and credit Interest Payable for $3,750.

On December 31, 2020, Pina Colada Corp. estimated that 4% of its net accounts receivable of...

On December 31, 2020, Pina Colada Corp. estimated that 4% of its net accounts receivable of $455,200 will become uncollectible. The company recorded this amount as an addition to Allowance for Doubtful Accounts. The allowance account had a zero balance before adjustment on December 31, 2020. On May 11, 2021, Pina Colada Corp. determined that the Jeff Shoemaker account was uncollectible and wrote off $2,276. On June 12, 2021, Shoemaker paid the amount previously written off. Prepare the journal entries...

On December 31, 2020, Bramble Company borrowed $60,888 from Paris Bank, signing a 5-year, $102,600 zero-interest-bearing...

On December 31, 2020, Bramble Company borrowed $60,888 from Paris Bank, signing a 5-year, $102,600 zero-interest-bearing note. The note was issued to yield 11% interest. Unfortunately, during 2022, Bramble 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 $76,950 at maturity. The market rate of interest on loans of this nature is now 12%. Prepare the entry to record the issuance of the loan...

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...

On December 31, 2020, Tamarisk Bank enters into a debt restructuring agreement with Barkley Company, which...

On December 31, 2020, Tamarisk Bank enters into a debt restructuring agreement with Barkley Company, which is now experiencing financial trouble. The bank agrees to restructure a 12%, issued at par, $2,200,000 note receivable by the following modifications: 1. Reducing the principal obligation from $2,200,000 to $1,440,000. 2. Extending the maturity date from December 31, 2020, to January 1, 2024. 3. Reducing the interest rate from 12% to 10%. Barkley pays interest at the end of each year. On January...

Beaver Inc. issues a 5,000,000 5-year, 8% fixed-rate interest note payable on December 31, 2020. Beaver...

Beaver Inc. issues a 5,000,000 5-year, 8% fixed-rate interest note payable on December 31, 2020. Beaver Inc. is worried that interest rates may decrease which would increase the value of its debt so it enters into a swap agreement with Lion Corp. The swap agreement specifies that Beaver Inc. will receive a fixed rate at 8% and pay a variable (floating) rate with settlement dates occurring on the dates interest payments are due. Interest payments are due annually on December...

Question