On January 1, 2019, Hondlik, Inc. owed Bengston Co. a total of $1,000,000 for an 8% N/P with
two years of life remaining. Because Hondlik was in financial difficulty, Bengston agreed to
replace the old note with a new two-year, $900,000, 4% N/P with interest paid annually on
December 31, 2019 and 2020.
Required: Prepare all journal entries on Hondlik's books starting with the restructuring of this
debt on January 1, 2019 and continuing through the payment at maturity of the new note on
December 31, 2020.