Question
Exercise 14-21 Marigold Company owes $190,000 plus $16,600 of accrued interest to Swifty State Bank. The debt is a 10-year, 10% note. During 2017, Marigolds
Exercise 14-21 Marigold Company owes $190,000 plus $16,600 of accrued interest to Swifty State Bank. The debt is a 10-year, 10% note. During 2017, Marigolds business deteriorated due to a faltering regional economy. On December 31, 2017, Swifty State Bank agrees to accept an old machine and cancel the entire debt. The machine has a cost of $344,000, accumulated depreciation of $189,200, and a fair value of $166,000. Prepare journal entries for Marigold Company and Swifty 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 amount is entered. Do not indent manually.) No. Date Account Titles and Explanation Debit Credit Marigold Company (Debtor): 1. December 31, 2017 Swifty State Bank (Creditor): 2. December 31, 2017 How should Marigold report the following in its 2017 income statement? 1. Gain or loss on the disposition of machine 2. Gain or loss on restructuring of debt Assume that, instead of transferring the machine, Marigold decides to grant 13,000 shares of its common stock ($10 par) which has a fair value of $166,000 in full settlement of the loan obligation. If Swifty State Bank treats Marigolds stock as a trading investment, prepare the entries to record the transaction for both parties. (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 amount is entered. Do not indent manually.) No. Date Account Titles and Explanation Debit Credit Marigold Company (Debtor): 1. December 31, 2017 Swifty State Bank (Creditor): 2. December 31, 2017 Click if you would like to Show Work for this question: Open Show Work
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