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Martinez Company owes $208,000 plus $19,200 of accrued interest to Sandhill State Bank. The debt is a 10-year, 10% note. During 2017, Martinez's business deteriorated
Martinez Company owes $208,000 plus $19,200 of accrued interest to Sandhill State Bank. The debt is a 10-year, 10% note. During 2017, Martinez's business deteriorated due to a faltering regional economy. On December 31, 2017, Sandhill State Bank agrees to accept an old machine and cancel the entire debt. The machine has a cost of $355,000, accumulated depreciation of $195,250, and a fair value of $192,000. (a) Prepare journal entries for Martinez Company and Sandhill State Bank to record this debt settlement. (If no entry is required, select "No Entry for the account titles and enter for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.) N. How should Martinez report the following in its 2017 income statement? 1. Gain or loss on the disposition of machine 2 Gain or loss on restructuring of debt
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