Tap Company owes a bank $1,000,000, which is currently due, but the company cannot make the payment. The bank agrees to accept the following in complete settlement of the liability:
Tap has an investment in debt securities, classified as held-to-maturity and carried at a cost of $500,000. Tap agrees to transfer the securities to the bank. Current market value of the securities is $520,000.
Tap will issue 10,000 shares of common stock (par value $1/share, market value $40/share) to the bank.
Required
Make the entry or entries necessary to record the settlement on Tap's books.

Question

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The Answer of Tap Company owes a bank $1,000,000, which is currently due, but the company cannot make the payment. The bank agrees to accept the following in complete settlement of the liability:
Tap has an investment in debt securities, classified as held-to-maturity and carried at a cost of $500,000. Tap agrees to transfer the securities to the bank. Current market value of the securities is $520,000.
Tap will issue 10,000 shares of common stock (par value $1/share, market value $40/share) to the bank.
Required
Make the entry or entries necessary to record the settlement on Tap's books.

Tap Company Owes a Bank $1,000,000, Which Is Currently Due