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Daniel Perkins is the sole shareholder of Perkins Inc which is currently under protection of the US bankruptcy court As a debtor in possession he has


Daniel Perkins is the sole shareholder of Perkins Inc., which is currently under protection of the U.S. bankruptcy court. As a “debtor in possession,” he has negotiated the following revised loan agreement with United Bank. Perkins Inc.’s $600,000, 12%, 10-year note was refinanced with a $600,000, 5%, 10-year note. Perkins has a market rate of interest of 15%.

Instructions

a. What is the accounting nature of this transaction?

b. Prepare the journal entry to record this refinancing on the books of Perkins Inc.

Apr 04 2020 View more View Less

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