Accent corp. owes $600,000 to Citizens Bank. The debt is a 10-year, 10% note due

Question

Accent corp. owes $600,000 to Citizens Bank. The debt is a 10-year, 10% note due December 31, 2012. Accent is in financial trouble. Citizens Bank agrees to extend the maturity date to December 31, 2015, reduce the principal to $500,000, and reduce the interest rate to 6%, payable annually each December 31.

a. Prepare the journal entries for Citizens Bank for the December 31 of 2012, 2013, 2014, and 2015. Show all work

b. Prepare the journal entries for Accent Corp. for the December 31 of 2012, 2013, 2014, and 2015. Show all work

Explanation / Answer

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