Brewer Inc. is owed $200,000 by Carol Co. under a 10% note with two yearsremaining to maturity. Due to financial difficulties Carol Co. did not pay the prioryear’s interest.
Brewer agrees to settle the receivable (and accrued interest) inexchange for a cash payment of $150,000.
The journal entry that Brewer would maketo record this transaction would include a loss on troubled debt restructuring of:
a.$0.
b.$20,000.
c.$50,000.
d.$70,000
