On January 1, 2010, the Boonville Corporation is delinquent on a $300,000 note to the Great National Bank on which $66,000 of interest has accrued. On January 2, 2010, Boonville enters into a debt restructuring agreement with the bank.
Prepare the journal entries for Boonville to record the restructuring agreement assuming:
1. The bank accepts 10,000 shares of Boonville’s $10 par common stock that is currently selling for $35 per share in full settlement of the debt.
2. The bank accepts land with a fair value of $342,000 in full settlement of the debt. The land is being carried on Boonville’s books at a cost of $324,000.