On January 1, 2007 the Boonville Corporation is delinquent on a $300,000 note to the Great National

Question:

On January 1, 2007 the Boonville Corporation is delinquent on a $300,000 note to the Great National Bank on which $66,000 of interest has accrued. On January 2, 2007 Boonville enters into a debt restructuring agreement with the bank.

Required

Prepare the journal entries for Boonville to record the restructuring agreement assuming:

1. The bank accepts 10,000 shares of Boonville’s $10 par common stock that is currently selling for $35 per share in full settlement of the debt.

2. The bank accepts land with a fair value of $342,000 in full settlement of the debt. The land is being carried on Boonville’s books at a cost of $324,000.

Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on... Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...