Marin Company owes $208,000 plus $18,700 of accrued interest to Headland State B
ID: 2605941 • Letter: M
Question
Marin Company owes $208,000 plus $18,700 of accrued interest to Headland State Bank. The debt is a 10-year, 10% note. During 20L Marin's business deteriorated due to a faltering regional economy. On December 31, 2017, Headland State Bank agrees to accept an old machine and cancel the entire debt. The machine has a cost of $405,000, accumulated depreciation of $222,750, and a fair value of $187,000. (a) Prepare journal entries for Marin Company and Headland State Bank to record this debt settlement. (If no entry is required, select "No Entry" for the account titles and enter o for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.) Debit Account Titles and Explanation Marin Company (Debtor): Date Credit 1. December 31, 2017 Notes Payable Interest Payable Accumulated Depreciation-Machine Machinery Gain on Disposal of Machinery Gain on Restructuring of Debt Headland State Bank (Creditor): ry 2. December 31, 2017 Machinery Allowance for Doubtful Accounts Notes Receivable Interest ReceivableExplanation / Answer
Answer
No
Date
Accounts Titles
Dr
Cr
1
Dec 31, 2017
Notes payable
208000
Interest payable
18700
Accumulated Depreciation-Machinery
222750
Machinery
405000
Gain on disposal of Machinery
4750
Gain on Restructuring of Debt
39700
(Asset exchanged for Debt)
No
Date
Accounts Titles
Dr
Cr
2
Dec 31, 2017
Machinery
187000
Allowance for Doubtful Accounts
39700
Notes Receivables
208000
Interest receivables
18700
(Asset exchanged)
No
Date
Accounts Titles
Dr
Cr
1
Dec 31, 2017
Notes payable
208000
Interest payable
18700
Accumulated Depreciation-Machinery
222750
Machinery
405000
Gain on disposal of Machinery
4750
Gain on Restructuring of Debt
39700
(Asset exchanged for Debt)
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.