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.
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.