Weaver Co. owes $1,398,600 to McBride Inc. The debt is a 10-year, 11% note. Because Weaver Co.

Question:

Weaver Co. owes $1,398,600 to McBride Inc. The debt is a 10-year, 11% note. Because Weaver Co. is in financial trouble, McBride Inc. agrees to accept some property and cancel the entire debt. The property has a book value of $560,000 and a fair market value of $840,000.

Instructions
(a) Prepare the journal entry on Weaver’s books for debt restructure.
(b) Prepare the journal entry on McBride’s books for debt restructure.