ACC 302, easy. Q6?

Grouper Company owes $179,000 plus $16,000 of accrued interest to Monty State Bank. The debt is a 10 -year, 10% note. During 2025 , Grouper's business deteriorated due to a faltering regional economy. On December 31, 2025, Monty State Bank agrees to accept an old machine and cancel the entire debt. The machine has a cost of $348,000, accumulated depreciation of $191,400, and a fair value of $160,000. (a) Prepare journal entries for Grouper Company and Monty State Bank to record this debt settlement. (If no entry is required, select "No Entry" for the account titles and enter O 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.) Monty State Bank (Creditor): December31,2025