Accounting for a Troubled Debt Restructuring on December 31, 2014

Essay

Accounting for a troubled debt restructuring On December 31, 2014, Riverside Inc.is in financial difficulty and cannot pay a $350,000 note (with $35,000 accrued interest payable)to Stockton Corp.Stockton agrees to forgive the accrued interest, extend the maturity date to December 31, 2016, and reduce the interest rate to 4%.The present value of the restructured cash flows is $299,500. Instructions Prepare entries for the following:
a.the restructure on Riverside's books
b.the payment of interest on December 31, 2015
c.the restructure on Stockton's books.