*E7-26B (Impairments) On December 31, 2014, Lloyds Company borrowed $50,663 from London Bank, signing a 6-year, $100,000 zero-interest-bearing note.

*E7-26B (Impairments) On December 31, 2014, Lloyds Company borrowed $50,663 from London Bank, signing a 6-year, $100,000 zero-interest-bearing note. The note was issued to yield 12% interest. Unfortunately, during 2017, Lloyds began to experience financial difficulty. As a result, at December 31, 2017, London Bank determined that it was probable that it would receive back only $60,000 at maturity. The market rate of interest on loans of this nature is now 15%.

Instructions

(a) Prepare the entry to record the issuance of the loan by London Bank on December 31, 2014.

(b) Prepare the entry, if any, to record the impairment of the loan on December 31, 2017, by London