Make the Jeonju journal entries to record the restructuring

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Question - Jeonju Co., after having experienced financial difficulties in 2019, negotiated with two major creditors and arrived at an agreement to restructure its debts on December 31, 2019. The two creditors were Lee and Kim. Lee was owed principal of $325,000 and interest of $40,000 but agreed to accept equipment worth $70,000 and notes receivable from Jeonju Co.'s customers worth $275,000. The equipment had an original cost of $95,000 and accumulated depreciation of $36,000. Kim was owed $650,000 and agreed to extend the terms and to accept immediate payment of $200,000 and the remaining agreed-upon balance of $486,697 to be paid on December 31, 2021. All payments were made according to schedule.

Make the Jeonju Co.'s journal entries to record the restructuring on December 31, 2019, and the entries necessary to make the adjustments and record payment on December 31, 2020, and 2021.

Reference no: EM132564471

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