Lion Corp is experiencing serious financial problems and their cash flow has not been sufficient to meet their loan obligations. Lion currently has 3 loan obligations outstanding as follows: -Loan from Bank Y with a balance $136,182 (originally 150,000) plus $3,632 of unpaid interest. The current interest rate is 8% and payments of $1,433.48 are due monthly. -Loan from Bank X with balance of $425,938 (originally 500,000) plus $14,198 of unpaid interest. The current interest rate is 8% and payments of $4,182 are due monthly. -Line of credit from Bank Z with a balance of $130,000 and $9,000 of unpaid interest. Current interest rate is 9% and interest only is due each month. In negotiations with Lions creditors, Lion is able to get the banks to agree to the following restructuring of the debt: -Bank Y will accept repossession of collateral pledged as security in full satisfaction of their loan. The collateral is a building with a fair value of $106,000 and carrying value after depreciation of $86,205. -Bank X will accept payments of $3,500 per month for the next 10 years in full satisfaction of their loan. -Bank Z will roll the line of credit into an installment loan that will require monthly payments of $1,535 for the next 10 years.

Required:

1. Show the journal entries to record the impairment of the Lion loans for: Bank Y Bank X Bank Z

2. Show the journal entry needed to record the receipt of the first payment (one month after the restructuring) for: Bank X Bank Z