On December $31,2023,$ AC$3220$ Inc. is in financial difficulty and cannot pay a $$175,000$ note $($with $$17,500$ accrued interest payable$)$ to AC$1350$ Corp. AC$1350$ agrees to forgive the accrued interest, extend the maturity date to December $31,2025,$ and reduce the interest rate to $4\%.$ The present value of the restructured cash flows is $$149,750.$

Instructions

Prepare entries for the following:

a$)$ the restructure on AC$3220\text{'}$s books.

b$)$ the payment of interest on December $31,2024$