Problem 2 Bella Company had an overdue 8% note payable to Marimar Bank at Php8,000,000 with acrrued interest of Php640,000. As a result of a settlement on January 1, 2020. Marimar Bank agreed to the...

Extracted text: Problem 2 Bella Company had an overdue 8% note payable to Marimar Bank at Php8,000,000 with acrrued interest of Php640,000. As a result of a settlement on January 1, 2020. Marimar Bank agreed to the following restructuring arrangement: - Reduced the principal obligation to Php7,000,000 - Forgave the Php640,000 accrued interest - Extended the maturity date to December 31, 2021 - Annual interest of 10% is to be paid on Dec. 31, 2020 and 2021 The present value of 1 at 8% for two periods is 0.8573, and the present value of an ordinary annuity of 1 for two periods is 1.7833 Required: - Prepare journal entries for 2020 and 2021 to record the modification of terms