At January 1, 2024, Transit Developments owed First City Bank Group $600,000, under an 11% note with
Question:
At January 1, 2024, Transit Developments owed First City Bank Group $600,000, under an 11% note with three years remaining to maturity.
∙ Due to financial difficulties, Transit was unable to pay the previous year’s interest.
∙ First City Bank Group agreed to settle Transit’s debt in exchange for land having a fair value of $450,000.
∙ Transit purchased the land in 2020 for $325,000.
Required:
Prepare the journal entry(s) to record the restructuring of the debt by Transit Developments.
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