Check my work At January 1, 2018, Transit Developments owed First City Bank Grou
ID: 2339773 • Letter: C
Question
Check my work At January 1, 2018, Transit Developments owed First City Bank Group $720,000, under an 9% note with three years remaining to maturity. Due to financial difficulties, Transit was unable to pay the previous year's interest First City Bank Group agreed to settle Transit's debt in exchange for land having a fair value of $570,000. Transit purchased the land in 2014 for $385,000 Required: Prepare the journal entry(s) to record the restructuring of the debt by Transit Developments.(If no entry is required for a transaction/event, select "No journal entry required" in the first account field.) View transaction list Journal entry worksheet Record the any necessary adjustment prior to recording the exchange for debt. Note: Enter debits before credits. General Journal Event Next >Explanation / Answer
Outstanding Loan A/c Dr 720,000 Outstanding Loan Interest A/c Dr- 720000*9% 64,800 To Land 385,000 To Gain on exchange of Land (570000-385000) 185,000 To Gain on Debt settlement-balancing figure 214,800 (Being loan settled with exchange of land ang gain recognised)