Current Attempt in Progress
On December 31, 2025, American Bank enters into a debt restructuring agreement with Swifty Company, which is now experiencing financial trouble. The bank agrees to restructure a 12%, issued at par, $3,810,000 note receivable by the following modifications:
Reducing the principal obligation from $3,810,000 to $3,048,000.
Extending the maturity date from December 31, 2025, to January 1, 2029.
Reducing the interest rate from 12% to 10%.
Swifty pays interest at the end of each year. On January 1, 2029, Swifty Company pays $3,048,000 in cash to American Bank.
(c) Assuming that the interest rate Swifty should use to compute interest expense in future periods is 1.4276%, prepare the interest payment schedule of the note for Swifty Company after the debt restructuring. (Round answers to 0 decimal places, e.g. 38,548.)
SWIFTY COMPANY
Interest Payment Schedule After Debt Restructuring Effective-Interest Rate
Reduction of Carrying Amount
Carrying Value of Note
Cash Paid
Interest Expense
Date
1/25
0
3,048,000
0
0
1/26
304,800
3,048,000
404,867
100,067
1/27
304,800
3,048,000
416,875
112,075
1/28
304,800
3,048,000
430,324
125,524
Total
914,400
3,048,000
1,252,067
337,667