On December 31, 2020, Short Co. is in financial difficulty and cannot pay a note due that day. It is a $2,000,000 note with $200,000 accrued interest payable to Bryan, Inc. Bryan agrees to forgive the accrued interest, reduce the principle balance due to $1,750,000, extend the maturity date to December 31, 2022, and reduce the interest rate to 4%. The present value of the restructured cash flows is $1,700,000.

Instructions:

Prepare entries for the following:

1. The restructure on Short's books.
2. The restructure on Bryan's books.
3. Short's payment of interest on December 31, 2021.