At January 1, 2018, Transit Developments owed First City Bank Group $600,000, under an 11% note with threeyears 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 2014 for $325,000.Required:Prepare the journal entry(s) to record the restructuring of the debt by Transit Developments.
At January 1, 2018, Transit Developments owed First City Bank Group $600,000, under an 11% note with threeyears 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 2014 for $325,000.Required:Prepare the journal entry(s) to record the restructuring of the debt by Transit Developments.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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At January 1, 2018, 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 2014 for $325,000.
Required:
Prepare the
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