On December $31,2019,$ Jermaine Co$.$ has agreed with Laura Bank to restructure its $$2,000,000,5-$year, $12\%$ note payable. The note was issued on January $1,2018$ when the interest rate was $12\%.$ The interest payments are made once a year on December $31.$

$($a$)$ Laura Bank has agreed to reduce the principal obligation by $15\%$ and the maturity date remained on December $31,2022.$

is this a settlement of debt or a non$-$substantial term modification? Show Calculations

Prepare necessary journal entries on the following dates. Dec $312019$ & Dec $312020$

$($b$)$ Assume instead that Laura Bank has agreed to cancel all interest payments and only collect $$2,662,000$ on December $31,2022.$

is this a settlement of debt or a non$-$substantial term modification? Show Calculations

Prepare necessary journal entries on the following dates. Dec $312019$ & Dec $312020$