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Prepare the journal entries to recorrd transaction

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Versatile company, after having experienced financial difficulties in 2020, negotiated with a major creditor and arrived at an agreement to restructure a note payable on December 31, 2020.

  • The creditor was owed principal of 3 600 000 and interest of 400 000 but agreed to accept equipment worth 700 000 and note receivable from a Versatile Company's customer with carrying amount of 2 700 000.
  • The equipment had an original cost of 900 000 accumulated depreciation of 300 000.

Problem 1: Prepare the journal entries to record transaction.

Reference no: EM132793345

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