Question 2, please. Info from question 1 provided

QUESTION 1 Delaware Corp. issued a 10%, two-year, $500,000 note paying annual interest each December 31 on 1/1/19 to Colorado Corp. in exchange for $500,000 of merchandise. Question: What account will Delaware DEBIT upon this issue of a note payable? 1. cost of goods sold 2. inventory O 3. supplies expense 04. notes receivable QUESTION 2 Delaware is unable to make the December 31, 2019 interest payment Delaware is a calendar year company and accrued the 2019 interest. SETTLEMENT On 1/1/20 Delaware agrees to transfer land and a building to Colorado in full settlement of the note. Land Building FMV 1/1/20 $100,000 $250,000 Original cost to Delaware 75,000 300,000 Accumulated Depreciation thru 1/1/20 100,000 Book Value 1/1/20 75,000 200,000 Question: What is the incremental impact on earnings for Delaware from the settlement? 275000