Marin Co$.$ owes $$199,800$ to Headland Inc. The debt is a $10-$year, $11\%$ note. Because Marin Co$.$ is in financial trouble, Headland Inc.

agrees to accept some land and cancel the entire debt. The property has a book value of $$95,600$ and a fair value of $$152,500.$

a$.$ Prepare the journal entry on Marin's books for debt restructure.

b$.$ Prepare the journal entry on Headland's books for debt restructure.

$($If no entry is required, select $"$No Entry" for the account titles and enter O for the amounts. Credit account titles are automatically indented

when the amount is entered. Do not indent manually. List all debit entries before credit entries.$)$

No$.$ Account Titles and Explanation

Debit

Credit

a$.$ Marin Co$.\text{'}$s entry:

$199800$

Interest Payable

Accumulated Depreciation$-$Machinery

b$.$ Headland Inc. entry: