Bonita Company owes $208,000 plus $18,700 of accrued interest to Windsor State Bank. The debt is a 10-year, 10% note. During 2017, Bonitas business deteriorated due to a faltering regional economy. On December 31, 2017, Windsor State Bank agrees to accept an old machine and cancel the entire debt. The machine has a cost of $405,000, accumulated depreciation of $222,750, and a fair value of $187,000.

Assume that, instead of transferring the machine, Bonita decides to grant 15,000 shares of its common stock ($10 par) which has a fair value of $187,000 in full settlement of the loan obligation. If Windsor State Bank treats Bonitas stock as a trading investment, prepare the entries to record the transaction for both parties.

What are the journal entries and calculations?