Wildhorse Co$.$ owes $$208,500$ to Sheffield Inc. The debt is a $10-$ year, $11\%$ note. Because Wildhorse Co$.$ is in financial trouble, Sheffield

Inc. agrees to accept some land and cancel the entire debt. The property has a book value of $$81,900$ and a fair value of $$147,900.$

a$.$ Prepare the journal entry on Wildhorse's books for debt restructure.

b$.$ Prepare the journal entry on Sheffield's books for debt restructure.

$($If no entry is required, select $"$No Entry" for the account titles and enter O for the amounts. Credit account titles are automatically indented

when the amount is entered. Do not indent manually. List all debit entries before credit entries.$)$

No$.$ Account Titles and Explanation

Debit

Credit

a$.$ Wildhorse Co$.\text{'}$s entry:

Notes Payable

Land

Gain on Restructuring of Debt

Gain on Disposal of Land

b$.$ Sheffield Inc. entry: