Gottlieb Co. owes $199,800 to Ceballos Inc. The debt is a 10-year, 11% note. Because Gottlieb Co. is in financial trouble, Ceballos Inc. agrees to accept some land and cancel the entire debt. The property has a book value of $90,000 and a fair value of $140,000.

Instructions

(a)

Prepare the journal entry on Gottlieb's books for debt restructure.

(b)

Prepare the journal entry on Ceballos's books for debt restructure.