Sarasota Company owes $167,000 plus $14,900 of accrued interest to Ivanhoe State Bank. The debt is a 10-year, 10% note. During 2025, Sarasota's business deteriorated due to a faltering regional economy. On December 31, 2025, Ivanhoe State Bank agrees to accept an old machine and cancel the entire debt. The machine has a cost of $322,000, accumulated depreciation of $177,100, and a fair value of $149,000.

No. Date Account Titles and Explanation Debit Credit Sarasota Companv_(Debtor): Accumulated Depredation-Machinery Machinery Gain on Dlsposal of Machinery Ivanhoe State Bank(Creditor): 2. Decembe