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Question(s) / Instruction(s):

*Ex. 14-109—Accounting for a troubled debt restructuring.
On December 31, 2006, Poore Co. is in financial difficulty and cannot pay a note due that day. It is a $500,000 note with $50,000 accrued interest payable to Edsen, Inc. Edsen agrees to forgive the accrued interest, extend the maturity date to December 31, 2008, and reduce the interest rate to 4%. The present value of the restructured cash flows is $428,000.

Instructions
Prepare entries for the following:
(a)     The restructure on Poore's books.
(b)     The payment of interest on December 31, 2007.
(c)     The restructure on Edsen’s books.

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