On December 31, 2010, Central Bank agrees to a restructuring of a 12% note with a $200,000 face value and $60,000 of accrued interest owed to the bank by Carter Company. The bank agrees to forgive the accrued interest, extend the maturity date to December 31, 2013, and reduce the annual interest rate to 6%. Carter Company paid the interest due on December 31, 2011.
Required:
1. Prepare the journal entry for Central Bank to record the restructuring of the note on December 31, 2010.
2. Prepare the journal entry for Central Bank to record the receipt of the interest on December 31, 2011.