Grouper Company owes $190,000 plus $16,600 of accrued interest to Monty State Bank. The debt is a 10-year, 10% note. During 2020, Groupers business deteriorated due to a faltering regional economy. On December 31, 2020, Monty 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 Grouper Company and Monty 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
		Grouper Company (Debtor):
1.	December 31, 2020	enter an account title to record the transaction for Grouper Company (Debtor) on December 31, 2020	enter a debit amount	enter a credit amount
		enter an account title to record the transaction for Grouper Company (Debtor) on December 31, 2020	enter a debit amount	enter a credit amount
		enter an account title to record the transaction for Grouper Company (Debtor) on December 31, 2020	enter a debit amount	enter a credit amount
		enter an account title to record the transaction for Grouper Company (Debtor) on December 31, 2020	enter a debit amount	enter a credit amount
		enter an account title to record the transaction for Grouper Company (Debtor) on December 31, 2020	enter a debit amount	enter a credit amount
		enter an account title to record the transaction for Grouper Company (Debtor) on December 31, 2020	enter a debit amount	enter a credit amount
		Monty State Bank (Creditor):
2.	December 31, 2020	enter an account title to record the transaction for Monty State Bank (Creditor) on December 31, 2020	enter a debit amount	enter a credit amount
		enter an account title to record the transaction for Monty State Bank (Creditor) on December 31, 2020	enter a debit amount	enter a credit amount
		enter an account title to record the transaction for Monty State Bank (Creditor) on December 31, 2020	enter a debit amount	enter a credit amount
		enter an account title to record the transaction for Monty State Bank (Creditor) on December 31, 2020	enter a debit amount	enter a credit amount

eTextbook and Media

List of Accounts

How should Grouper report the following in its 2020 income statement?

1.		Gain or loss on the disposition of machine		select between gain and loss Ordinary LossOrdinary IncomeOrdinary GainOrdinary Expense
2.		Gain or loss on restructuring of debt		select between gain and loss Ordinary IncomeOrdinary ExpenseOrdinary LossOrdinary Gain

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List of Accounts

Assume that, instead of transferring the machine, Grouper 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 Monty State Bank treats Groupers 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
		Grouper Company (Debtor):
1.	December 31, 2020	enter an account title to record the transaction for Grouper Company (Debtor) on December 31, 2020	enter a debit amount	enter a credit amount
		enter an account title to record the transaction for Grouper Company (Debtor) on December 31, 2020	enter a debit amount	enter a credit amount
		enter an account title to record the transaction for Grouper Company (Debtor) on December 31, 2020	enter a debit amount	enter a credit amount
		enter an account title to record the transaction for Grouper Company (Debtor) on December 31, 2020	enter a debit amount	enter a credit amount
		enter an account title to record the transaction for Grouper Company (Debtor) on December 31, 2020	enter a debit amount	enter a credit amount
		Monty State Bank (Creditor):
2.	December 31, 2020	enter an account title to record the transaction for Monty State Bank (Creditor) on December 31, 2020	enter a debit amount	enter a credit amount
		enter an account title to record the transaction for Monty State Bank (Creditor) on December 31, 2020	enter a debit amount	enter a credit amount
		enter an account title to record the transaction for Monty State Bank (Creditor) on December 31, 2020	enter a debit amount	enter a credit amount
		enter an account title to record the transaction for Monty State Bank (Creditor) on December 31, 2020	enter a debit amount	enter a credit amount

eTextbook and Media

List of Accounts