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 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