Problem
On December 31, 2023, Blue Spruce Inc. is in financial difficulty and cannot pay a $345,500 note (with $34,550 accrued interest payable) to Crane Corp. Crane agrees to forgive the accrued interest, extend the maturity date to December 31, 2025, and reduce the interest rate to 5%. The present value of the restructured cash flows is $304,040.
• Prepare entries for the restructure on Blue Spruce's books.