Entries to record restructuring of debt. Rose Corporation was unable to service its outstanding debts. The company is considered to be experiencing significant financial difficulties. In an attempt to avoid filing for bankruptcy, it took the following measures:

a) Patents with book value of $140,000 and accumulated amortization of $115,000 were sold for $20,000.

b) Goodwill with a book value of $150,000 resulted from the acquisition of a small manufacturing firm in Indiana. The goodwill was tested for impairment, and it was concluded that $100,000 of the goodwill was impaired.

c) A mortgage on a parcel of vacant land had a book value of $230,000. The land with a book value of $210,000 was sold for net proceeds of $185,000 after payment of $10,000 of Transaction costs. The mortgage holder accepted the proceeds in full settlement of the mortgage and related accrued interest of $15,000.

d) A loan from a major shareholder/employee had a remaining principal amount of $150,000 plus accrued interest of $4,500 based on the state rate of 12% payable quarterly. Given significantly lower current market rates, the shareholder agreed to restructure the debt as follows: 6% interest, 16 quarterly payments of principal and interest in the amount of $8,810.25, and receipt of a cash bonus of $30,000 in satisfaction of any remaining debt.

e) A major vendor had a payable balance of $85,000, which had remained unpaid for over five months. In satisfaction of the payable, the vendor agreed to receive an immediate cash payment of $15,000 plus six monthly payments of $10,000 each.

f) Bank debt with an outstanding balance of $532,000 including accrued interest of $22,000 was reduced by $80,000 in exchange for investment securities that were recorded at their market value of $62,000. Another $200,000 of debt was exchanged for treasury stock of the company that had a par value of $50,000 and an original cost of $150,000. The balance of debt was restructured calling for 10 quarterly payments of $27,470.38. The original bank debt had a stated interest of 8%.

g) A bank note payable with a balance of $60,000 was restructured by making three quarterly payments of $17,000.

h) A partially secured creditor with a debt balance of $120,000 repossessed equipment that served as collateral. The equipment had a book value of $220,000 and accumulated depreciation of $150,000. The remaining $40,000 of debt was to be paid over the next six quarters in equal payments bearing interest at 5.6%, compared to the original rate of 6.4%.

Required: Prepare all of the necessary entries to record the above events (a) through (h). Determine the total amount of interest expense to be recognized in connection with the first quarterly payment associated with the restructured debts.