Respuesta :
Answer:
Explanation:
On January 1, 2019, Crouser Company sold the land to Chad Company, accepting a 2-year, $150,000, non-interest-bearing note due January 1, 2021. The fair value of the land was $123,966.90 on the date of sale.
The company purchased the land for $120,000 on January 1, 2013. Prepare all the journal entries on Crouser's books for January 1, 2013, through January 1, 2015, in regard to the Chad note
On the date of Sale - Jan 1, 2019
Debit Notes Receivable........123,966.90
Credit Land.....................................................123,966.9
Being sale of land to Chad Company, accepting a 2-year, $150,000, non-interest-bearing note due January 1, 2021
(Note that the short fall between the value of the land and the note receivable represents a discounting of the note receivable to Present Value, and this discounted amount of 26033.1 will be unwound in 2 years)
On 31 Dec 2019
Debit. Notes Receivable.........................12,396
Credit. Interest Income......(10% x 123,966.9)...12,396
Being the unwinding of the interest on Notes Receivable against land sale
On 31 Dec 2020
Debit. Notes Receivable.........................13,636.29
Credit. Interest Income......(10% x (123,966.9+12,396))...13,636.29
Being the unwinding of the interest on Notes Receivable against land sale
On Jan 1 2021
Debit Cash...........................150,000
Credit Note Receivable....................150,000
