On December 15, 20X5, Thom Corporation informed Linco Company that Thom would be unable to repay its \(\$ 80,000\) note due on December 31 to Linco. Linco agreed to accept title to Thom's delivery equipment in full settlement of the note. The equipment's carrying value was \(\$ 30,000\) and its fair value was \(\$ 35,000\). Thom's tax rate is 35 percent.

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Prepare journal entries on the debtor's and creditor's books on December 15, 20X5.