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Headland Co. owes $201,100 to Sage Inc. The debt is a 10-year, 11% note. Because Headland Co. is in financial trouble, Sage Inc. agrees to

Headland Co. owes $201,100 to Sage Inc. The debt is a 10-year, 11% note. Because Headland Co. is in financial trouble, Sage Inc. agrees to accept some land and cancel the entire debt. The property has a book value of $87,800 and a fair value of $134,500.

(a) Prepare the journal entry on Headlands books for debt restructure.

(b) Prepare the journal entry on Sages books for debt restructure.

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