E14.20 (LO3) (Entries for Settlement of Debt) Consider the following independent situations. Instructions a. Gottlieb...
80.2K
Verified Solution
Link Copied!
Question
Accounting
E14.20 (LO3) (Entries for Settlement of Debt) Consider the following independent situations.
Instructions
a. Gottlieb Stores owes 199,800 to Ceballos SpA. The debt is a 10-year, 11% note. Because Gottlieb is in financial trouble, Ceballos agrees to accept some land and cancel the entire debt. The land has a book value of 90,000 and a fair value of 140,000. Prepare the journal entry on Gottlieb's books for debt settlement.
b. Vargo Corp. owes $270,000 to First Trust. The debt is a 10-year, 12% note due December 31, 2019. Because Vargo Corp. is in financial trouble, First Trust agrees to extend the maturity date to December 31, 2021, reduce the principal to $220,000, and reduce the interest rate to 5%, payable annually on December 31. Vargo's market rate of interest is 8%. Prepare the journal entries on Vargo's books on December 31, 2019, 2020, and 2021.
(b) Principal PV : 0.85734 interest payment PV : 1.78326
Get Answers to Unlimited Questions
Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!
Membership Benefits:
- Unlimited Question Access with detailed Answers
- Zin AI - 3 Million Words
- 10 Dall-E 3 Images
- 20 Plot Generations
- Conversation with Dialogue Memory
- No Ads, Ever!
- Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Other questions asked by students
StudyZin's Question Purchase
1 Answer
$0.99
(Save $1 )
One time Pay
- No Ads
- Answer to 1 Question
- Get free Zin AI - 50 Thousand Words per Month
Unlimited
$4.99*
(Save $5 )
Billed Monthly
- No Ads
- Answers to Unlimited Questions
- Get free Zin AI - 3 Million Words per Month
*First month only
Free
$0
- Get this answer for free!
- Sign up now to unlock the answer instantly
You can see the logs in the Dashboard.