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