Problemelton inc which owes boston co 900000 in notes, Ask an Expert

Accounting

Problem:

Elton, Inc., which owes Boston Co. $900,000 in notes payable, is in financial difficulty. To eliminate the debt, Boston agrees to accept from Elton land having a fair market value of $680,000 and a recorded cost of $510,000.

Required:

Question 1: Compute the amount of gain or loss to Elton, Inc. on the transfer (disposition) of the land.

Question 2: Compute the amount of gain or loss to Elton, Inc. on the settlement of the debt.

Question 3: Prepare the journal entry on Elton's books to record the settlement of this debt.

Question 4: Compute the gain or loss to Boston Co. from settlement of its receivable from Elton.

Question 5: Prepare the journal entry on Boston's books to record the settlement of this receivable.

Note: Be sure to show how you arrived at your answer.

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M91164204

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