E14.20 (LO 3) (Entries for Settlement of Debt) Consider the following independent situations. Instructions a. Gottlieb Stores owes 199,800 to Ceballos SpA. The debt is a 10-year, 11% note. Because Gottlieb is in financial trouble, Ceballos agrees to accept some land and cancel the entire debt. The land has a book value of 90,000 and a fair value of 140,000. Prepare the journal entry on Gottlieb's books for debt settlement. b. Vargo Corp. owes $270,000 to First Trust. The debt is a 10-year, 12% note due December 31, 2022. Because Vargo Corp. is in financial trouble, First Trust agrees to extend the maturity date to December 31, 2024, reduce the principal to $220,000, and reduce the interest rate to 5%, payable annually on December 31. Vargo's market rate of interest is 8%. Prepare the journal entries on Vargo's books on December 31, 2022, 2023, and 2024.

E14.20) (LO 3) (Entries for Settlement of Debt) Consider the following independent situations. Instruetions a. Gottlieb Stores owes C199,800 to Ceballos SpA. The debt is a 10-year, 11\% note. Because Gottlieb is in financial trouble, Ceballos agrees to aceept some land and eancel the entire debt. The land has a book value of 90,000 and a fair value of 140,000. Prepare the journal entry on Gottlieb's books for debt settlement. b. Vargo Corp, owes \$270,000 to First Trust. The debt is a 10-year, 12\% note due December 31, 2022. Because Vargo Corp, is in financial trouble, First Trust agrees to extend the maturity date to Deecmber 31,2024 , reduee the prineipal to $220,000, and reduce the interest rate to 5%, payable annually on December 31 . Vargo's market rate of interest is 8%. Prepare the journal entries on Vargo's books on December 31, 2022, 2023, and 2024