Problem
Perry National Bank has a note receivable of $200,000 from Mogren Company that it is carrying at face value and is due on December 31, 2020. Interest on the note is payable at 9% each December 31. Mogren paid the interest due on December 31, 2016, but informed the bank that it would probably miss the next 2 years' interest payments because of its financial difficulties. After that, it expected to resume its annual interest payments, but it would make the principal payment one year late, with interest paid for that additional year at the time of the principal payment.
Required:
1. Compute the value of the impaired loan on December 31, 2016.
2. Prepare the journal entries from 2016 to 2021 for the bank to record the above events.