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23 August, 01:33

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

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  1. 23 August, 02:51
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    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
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Home » Business » 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.
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