MedQuest Enterprises is threatened with bankruptcy due to its inability to meet interest payments and fund requirements to retire $5,000,000 of long-term notes. The notes are all held by Dynasty Insurance Company. In order to prevent bankruptcy, MedQuest has entered into an agreement with Dynasty to exchange equity securities for the debt. The terms of the exchange are as follows: 300,000 shares of $1 par common stock, current market value $10 per share, and 24,000 shares of $10 par preferred stock, current market value $65 per share. Prepare journal entries for the exchange on the books of MedQuest Enterprises according to the requirements of FASB Statement No. 15.