Collier Port Authority Has Had a Long-Standing Relationship with a Nearby

question 69

Essay

Collier Port Authority has had a long-standing relationship with a nearby lumber company, which ships a significant amount of lumber through the port. To help finance the lumber company's operations, Collier advanced $10 million to them in return for a promissory note which specified payment of the $10 million, plus interest at 15%, due at the end of two years. However, due to adverse conditions in the lumber industry, the lumber company was unable to meet its obligation and pay Collier at the end of the two years. In light of the importance of the relationship between Collier and the lumber company, Collier extended the due date by three years (after the original two years), but increased the repayment amount to $14 million, inclusive of interest. The market interest rate for the loan remained at 15%.
Record the journal entries relating to the note receivable from the date of issuance to the restructuring date, inclusive.

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Definitions:

Stress

The body's response to any demand or challenge, which can be triggered by both positive and negative experiences.

Denial

A psychological defense mechanism involving refusal to accept reality or facts, thus avoiding a painful or uncomfortable truth.

Projection

A defense mechanism where an individual ascribes their own unwanted thoughts, feelings, or motivations to someone else.

Defense Mechanisms

Psychological strategies used unconsciously to protect oneself from anxiety and internal conflict by denying or distorting reality.