Vaughn Company owes $ 172,000 plus $ 14,900 of accrued interest to Bramble State Bank. The debt is a 10-year, 10% note. During 2020, Vaughns business deteriorated due to a faltering regional economy. On December 31, 2020, Bramble State Bank agrees to accept an old machine and cancel the entire debt. The machine has a cost of $ 323,000, accumulated depreciation of $ 177,650, and a fair value of $ 149,000.

Prepare journal entries for Vaughn Company and Bramble State Bank to record this debt settlement. (If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.)