The first subsequent payment (#27) for ME will be recorded as:
Note payable a/c dr. $3.4 m
To Bank a/c cr. $2.8 m
To Gain on debt settlement cr. $600k
(Being quarterly amount paid to CGT at a gain of $600k)
The first payment for CGT will be recorded as:
Bank a/c dr. $2.8 m
Loss on debt settlement a/c dr $600k
To Note Receivable cr. $3.4 m
(Being quarterly amount received from ME at a loss of $600k)
Problem #3 (30): More Ecclesiastical (ME) borrowed $165.0 m from Cromwell Guaranty & Trust (CGT) on...