Novak Corp. owes $269,000 to Splish Trust. The debt is a 10-year, 12% note due December 31, 2020. Because Novak Corp. is in financial trouble, Splish Trust agrees to extend the maturity date to December 31, 2022, reduce the principal to $215,000, and reduce the interest rate to 7%, payable annually on December 31.

(a) Prepare the journal entries on Novaks books on December 31, 2020, 2021, 2022.

(b) Prepare the journal entries on Splish Trusts books on December 31, 2020, 2021, 2022.