Suppose B borrows $100,000 from L and uses it to drill an oil well. B hits a dry hole and loses the entire $100,000 investment. Although B is solvent, L discharges $40,000 of the debt.

Journal entries to record these events might look like this:

Kirby Lumber Suppose B borrows $100,000 from L and uses it to drill an oil well. B hits a dry hole and loses the entire $100,000 investment. Although B is solvent, L discharges $40,000 of the debt. Journal entries to record these events might look like this: Cash $100,000 Debt payable Loss on oil well $100,000 $100,000 Cash $100,000 Debt payable ?_____ $40,000 $40,000 Under the \"Whole Transaction\" theory, what account would be credit above for $40,000? Under the \"Freeing-of-Assets theory, what account would be credited above for $40,000? Under the \"Loan Proceeds\" theory, what account would be credited above for $40,000