ZuoTi.Pro
Question

Bonita Company owes $208,000 plus $18,700 of accrued interest to Windsor State Bank. The debt is...

Bonita Company owes $208,000 plus $18,700 of accrued interest to Windsor State Bank. The debt is a 10-year, 10% note. During 2017, Bonita’s business deteriorated due to a faltering regional economy. On December 31, 2017, Windsor State Bank agrees to accept an old machine and cancel the entire debt. The machine has a cost of $405,000, accumulated depreciation of $222,750, and a fair value of $187,000.

Assume that, instead of transferring the machine, Bonita decides to grant 15,000 shares of its common stock ($10 par) which has a fair value of $187,000 in full settlement of the loan obligation. If Windsor State Bank treats Bonita’s stock as a trading investment, prepare the entries to record the transaction for both parties.

What are the journal entries and calculations?

business   accounting   
0 0
Add a comment Improve this question Transcribed image text
Next > < Previous
Sort answers by oldest

Homework Answers

Answer #1

0 0
Add a comment
Know the answer?
Add Answer to:
Bonita Company owes $208,000 plus $18,700 of accrued interest to Windsor State Bank. The debt is...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions

  • Sunland Company owes $208,000 plus $18,700 of accrued interest to Coronado State Bank. The debt is...

    Sunland Company owes $208,000 plus $18,700 of accrued interest to Coronado State Bank. The debt is a 10- year, 10% note. During 2017, Sunland's business deteriorated due to a faltering regional economy. On December 31, 2017. Coronado State Bank agrees to accept an old machine and cancel the entire debt. The machine has a cost of $405,000, accumulated depreciation of $222,750, and a fair value of $187,000. Prepare journal entries for Sunland Company and Coronado State Bank to record this...

  • Cullumber Company owes $210,000 plus $18,700 of accrued interest to Riverbed State Bank. The debt is...

    Cullumber Company owes $210,000 plus $18,700 of accrued interest to Riverbed State Bank. The debt is a 10-year, 10% note. During 2017, Cullumber's business deteriorated due to a faltering regional economy. On December 31, 2017, Riverbed State Bank agrees to accept an old machine and cancel the entire debt. The machine has a cost of $398,000, accumulated depreciation of $218,900, and a fair value of $187,000. Prepare journal entries for Cullumber Company and Riverbed State Bank to record this debt...

  • Exercise 14-21 Metlock Company owes $221,000 plus $20,100 of accrued interest to Bonita State Bank. The...

    Exercise 14-21 Metlock Company owes $221,000 plus $20,100 of accrued interest to Bonita State Bank. The debt is a 10-year, 10% note. During 2020, Metlock's business deteriorated due to a faltering regional economy. On December 31, 2020, Bonita State Bank agrees to accept an old machine and cancel the entire debt. The machine has a cost of $402,000, accumulated depreciation of $221,100, and a fair value of $ 201,000. Prepare journal entries for Metlock Company and Bonita State Bank to...

  • Vaughn Company owes $176,000 plus $15,600 of accrued interest to Bramble State Bank. The debt is...

    Vaughn Company owes $176,000 plus $15,600 of accrued interest to Bramble State Bank. The debt is a 10-year, 10% note. During 2020, Vaughn’s business deteriorated due to a faltering regional economy. On December 31, 2020, Bramble State Bank agrees to accept an old machine and cancel the entire debt. The machine has a cost of $333,000, accumulated depreciation of $183,150, and a fair value of $156,000. Prepare journal entries for Vaughn Company and Bramble State Bank to record this debt...

  • Boswel Company owes $200,000 plus $18,000 of accrued interest to Grey Bank. The debt is a...

    Boswel Company owes $200,000 plus $18,000 of accrued interest to Grey Bank. The debt is a 10-year, 10% note. During 2019, Boswel’s business deteriorated due to a faltering regional economy. On December 31, 2019, Grey Bank agrees to accept an old machine and cancel the entire debt. The machine has a cost of $390,000, accumulated depreciation of $221,000, and a fair value of $180,000. Instructions (a) Prepare journal entries for Boswel Company to record this debt settlement. (4 marks) (b)...

  • entries for December 31,2020 Shamrock Company owes $221,000 plus $20,100 of accrued interest to Bridgeport State...

    entries for December 31,2020 Shamrock Company owes $221,000 plus $20,100 of accrued interest to Bridgeport State Bank. The debt is a 10-year, 10% note. During 2020, Shamrock's business deteriorated due to a faltering regional economy. On December 31, 2020, Bridgeport State Bank agrees to accept an old machine and cancel the entire debt. The machine has a cost of $402,000, accumulated depreciation of $221.100, and a fair value of $201,000. Assume that, instead of transferring the machine, Shamrock decides to...

  • Exercise 14-21 Seaview Company owes $175,000 plus $15,200 of accrued interest to Indigo State Bank. The...

    Exercise 14-21 Seaview Company owes $175,000 plus $15,200 of accrued interest to Indigo State Bank. The debt is a 10-year, 10% note. During 2020, Seaview’s business deteriorated due to a faltering regional economy. On December 31, 2020, NewCity State Bank agrees to accept an old machine and cancel the entire debt. The machine has a cost of $329,000, accumulated depreciation of $180,950, and a fair value of $152,000. Part 1: Prepare journal entries for Seaview Company and NewCity State Bank...

  • Exercise 14-21 Larkspur Company owes $222,000 plus $20,600 of accrued interest to Cullumber State Bank. The debt i...

    Exercise 14-21 Larkspur Company owes $222,000 plus $20,600 of accrued interest to Cullumber State Bank. The debt is a 10-year, 10% note. During 2017, Larkspur's business deteriorated due to a faltering regional economy. On December 31, 2017, Cullumber State Bank agrees to accept an old machine and cancel the entire debt. The machine has a cost of $344,000, accumulated depreciation of $189,200, and a fair value of $206,000. Prepare journal entries for Larkspur Company and Cullumber State Bank to record...

  • Exercise 14-21 Larkspur Company owes $222,000 plus $20,600 of accrued interest to Cullumber State Bank. The...

    Exercise 14-21 Larkspur Company owes $222,000 plus $20,600 of accrued interest to Cullumber State Bank. The debt is a 10-year, 10% note. During 2017, Larkspur's business deteriorated due to a faltering regional economy. On December 31, 2017, Cullumber State Bank agrees to accept an old machine and cancel the entire debt. The machine has a cost of $344,000, accumulated depreciation of $189,200, and a fair value of $206,000. Prepare journal entries for Larkspur Company and Cullumber State Bank to record...

  • Exercise 14-21 Shamrock Company owes $201,000 plus $17,900 of accrued interest to Bridgeport State Bank. The...

    Exercise 14-21 Shamrock Company owes $201,000 plus $17,900 of accrued interest to Bridgeport State Bank. The debt is a 10-year, 10% note. During 2017, Shamrock's business deteriorated due to a faltering regional economy. On December 31, 2017, Bridgeport State Bank agrees to accept an old machine and cancel the entire debt. The machine has a cost of $354,000, accumulated depreciation of $194,700, and a fair value of $179,000. Prepare journal entries for Shamrock Company and Bridgeport State Bank to record...

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT