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7. Crane Company owes $236,000 plus $21,500 of accrued interest to Cheyenne State Bank. The debt is a 10 -year, 10% note. During 2025, Crane's
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Crane Company owes $236,000 plus $21,500 of accrued interest to Cheyenne State Bank. The debt is a 10 -year, 10% note. During 2025, Crane's business deteriorated due to a faltering regional economy. On December 31, 2025, Cheyenne State Bank agrees to accept an old machine and cancel the entire debt. The machine has a cost of $383,000, accumulated depreciation of $210,650, and a fair value of $215,000. Prepare journal entries for Crane Company and Cheyenne State Bank to record this debt settlement. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually. List all debit entries before credit entries.)Step by Step Solution
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