Bonita Corp. owes Windsor Corp. a 10-year, 10% note in the amount of $356,400 plus $35,640 of accrued interest. The note is due today, December 31, 2020. Because Bonita Corp. is in financial trouble, Windsor Corp. agrees to forgive the accrued interest, $32,400 of the principal, and to extend the maturity date to December 31, 2023. Interest at 10% of revised principal will continue to be due on 12/31 each year. Assume the following present value factors for 3 periods.

21/4% 23/8% 21/2% 25/8% 23/4% 3%
Single sum 0.93543 0.93201 0.92859 0.92521 0.92184 0.91514
Ordinary annuity of 1 2.86989 2.86295 2.85602 2.84913 2.84226 2.82861

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Compute the new effective-interest rate for Bonita Corp. following restructure. (Hint: Find the interest rate that establishes approximately $392,040 as the present value of the total future cash flows.) (Round effective interest rate to 3 decimal places, e. g. 4.657%.)

Effective-interest rate
%

Prepare a schedule of debt reduction and interest expense for the years 2020 through 2023. (Round answers to 0 decimal places, e. g. 38,548.)

SCHEDULE OF DEBT REDUCTION
AND INTEREST EXPENSE AMORTIZATION

Date

Cash
Paid

Interest
Expense

Premium
Amortized
Carrying
Amount of
Note
12/31/20 $
$
$
$
12/31/21
12/31/22
12/31/23
12/31/23

Compute the gain or loss for Windsor Corp. and prepare a schedule of receivable reduction and interest revenue for the years 2020 through 2023. (Round present value factor calculations to 5 decimal places, e. g. 1.25124 and the final answers to 0 decimal places e. g. 58,971.)

The gain or loss for Windsor Corp. $

SCHEDULE OF DEBT REDUCTION
AND INTEREST EXPENSE AMORTIZATION

Date

Cash
Received

Interest
Revenue
Change in
Carrying
Amount
Carrying
Amount of
Note
12/31/20 $
$
$
$
12/31/21
12/31/22
12/31/23
12/31/23

Prepare all the necessary journal entries on the books of Bonita Corp. for the years 2020, 2021, and 2022. (Round answers to 0 decimal places, e. g. 38,548. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Date
Account Titles and Explanation
Debit
Credit
Dec. 31, 2020
Dec. 31, 2021
Dec. 31, 2022

Prepare all the necessary journal entries on the books of Windsor Corp. for the years 2020, 2021, and 2022. (Round answers to 0 decimal places, e. g. 38,548. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.)

Date
Account Titles and Explanation
Debit
Credit
Dec. 31, 2020
Dec. 31, 2021
Dec. 31, 2022