Question

Exercise 14-21 (Part Level Submission) Monty Company owes $225,000 plus $20,200 of accrued interest to Flounder State Bank. The debt is a 10-year, 10% note. During 2020, Monty’s business deteriorated due to a faltering regional economy. On December 31, 2020, Flounder State Bank agrees to accept an old machine and cancel the entire debt. The machine has a cost of $317,000, accumulated depreciation of $174,350, and a fair value of $202,000. (c) Assume that, instead of transferring the machine, Monty decides to grant 12,000 shares of its common stock ($10 par) which has a fair value of $202,000 in full settlement of the loan obligation. If Flounder State Bank treats Monty’s stock as a trading investment, prepare the entries to record the transaction for both parties. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.) No. Date Account Titles and Explanation Debit Credit Monty Company (Debtor): 1. December 31, 2020 enter an account title to record the transaction for Monty Company (Debtor) on December 31, 2020 enter a debit amount enter a credit amount enter an account title to record the transaction for Monty Company (Debtor) on December 31, 2020 enter a debit amount enter a credit amount enter an account title to record the transaction for Monty Company (Debtor) on December 31, 2020 enter a debit amount enter a credit amount enter an account title to record the transaction for Monty Company (Debtor) on December 31, 2020 enter a debit amount enter a credit amount enter an account title to record the transaction for Monty Company (Debtor) on December 31, 2020 enter a debit amount enter a credit amount Flounder State Bank (Creditor): 2. December 31, 2020 enter an account title to record the transaction for Flounder State Bank (Creditor) on December 31, 2020 enter a debit amount enter a credit amount enter an account title to record the transaction for Flounder State Bank (Creditor) on December 31, 2020 enter a debit amount enter a credit amount enter an account title to record the transaction for Flounder State Bank (Creditor) on December 31, 2020 enter a debit amount enter a credit amount enter an account title to record the transaction for Flounder State Bank (Creditor) on December 31, 2020 enter a debit amount enter a credit amount SHOW LIST OF ACCOUNTS LINK TO TEXT Attempts: 0 of 3 used SAVE FOR LATER SUBMIT ANSWER

Answer 1

Decal I Answert () Journal entry in the books of Monty company. Ipate particulars TIF Debit credit 2020. Notes payable Alc. Or $225,000 Interest payable Ale Or 420,200 To common stock liepooxşid $190,000 To Additional paid in $82,000 - capital To Gain on Debt restructuring $43,200 $225,000+$20,000-$ 202,000] C-2) Journal enlou in the booles of Flunder state bank particulars LE Debit credit 2020 Investment Abc or $200,000 | Allowance for doubtful ala arl $43,200 TO Note Receivable $225,000 TO Interest Receivable $ 20,200 Dat peeg/