On July 1, 2014, Agincourt Inc. made two sales.

1. It sold land having a fair value of $918,000 in exchange for a 4-year zero-interest-bearing promissory note in the face amount of $1,393,591. The land is carried on Agincourt's books at a cost of $600,100.

2. It rendered services in exchange for a 5%, 8-year promissory note having a face value of $404,300 (interest payable annually).

Agincourt Inc. recently had to pay 8% interest for money that it borrowed from British National Bank. The customers in these two transactions have credit ratings that require them to borrow money at 11% interest.

Required:

Record the two journal entries that should be recorded by Agincourt Inc. for the sales transactions above that took place on July 1, 2014.

Question

Business

Jaquan Boyle

16 August, 14:49

On July 1, 2014, Agincourt Inc. made two sales.

1. It sold land having a fair value of $918,000 in exchange for a 4-year zero-interest-bearing promissory note in the face amount of $1,393,591. The land is carried on Agincourt's books at a cost of $600,100.

2. It rendered services in exchange for a 5%, 8-year promissory note having a face value of $404,300 (interest payable annually).

Agincourt Inc. recently had to pay 8% interest for money that it borrowed from British National Bank. The customers in these two transactions have credit ratings that require them to borrow money at 11% interest.

Required:

Record the two journal entries that should be recorded by Agincourt Inc. for the sales transactions above that took place on July 1, 2014.

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Answers (1)

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Amani Mathis · Answer 1

Date Account title and Explanation Debit Credit

1st july-14 Notes receivable $1,393,591

Discount on notes receivable ($1,393,591 - S600,100 - $317,900) $475,591

Land $600,100

Gain on disposal of land ' ($918,000 - $600,100) $317,900 ' (To record sale of land)

1-Jul-14

Notes receivable $404,300

Service revenue $404,300

' (to record service revenue)