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Marigold Co. owes $199,800 to Swifty Inc. The debt is a 10-year, 11% note. Because Marigold...

Marigold Co. owes $199,800 to Swifty Inc. The debt is a 10-year, 11% note. Because Marigold Co. is in financial trouble, Swifty Inc. agrees to accept some land and cancel the entire debt. The property has a book value of $95,600 and a fair value of $152,500.

(a) Prepare the journal entry on Marigold’s books for debt restructure.
(b) Prepare the journal entry on Swifty’s books for debt restructure.
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Solution a) Marigolds NO General Journal Debit Gedet Notes payable 199800 Land 95600 56900 Gain on desposal of asset [152500

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