On January 1, 2019, Tabor Company sold land with a book value of $50,000 to Wilson Company, accepting a $60,000 note, payable in three $20,000 annual installments beginning December 31, 2019. The note carried no stated interest rate and the fair values of the land and the note were not determinable. An appropriate interest rate for this note is 12%. Required: Prepare the journal entries on Tabor’s books to record (1) the sale and (2) the annual interest income and receipt of each $20,000 installment.
On January 1, 2019, Tabor Company sold land with a book value of $50,000 to Wilson Company, accepting a $60,000 note, payable in three $20,000 annual installments beginning December 31, 2019. The note carried no stated interest rate and the fair values of the land and the note were not determinable. An appropriate interest rate for this note is 12%. Required: Prepare the journal entries on Tabor’s books to record (1) the sale and (2) the annual interest income and receipt of each $20,000 installment.
Intermediate Accounting: Reporting And Analysis
3rd Edition
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Chapter14: Financing Liabilities: Bonds And Long-term Notes Payable
Section: Chapter Questions
Problem 14RE: On January 1, 2019, Boater Company issues a 20,000 non-interest-bearing, 5-year note for equipment....
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On January 1, 2019, Tabor Company sold land with a book value of $50,000 to Wilson Company, accepting a $60,000 note, payable in three $20,000 annual installments beginning December 31, 2019. The note carried no stated interest rate and the fair values of the land and the note were not determinable. An appropriate interest rate for this note is 12%.
Required:
Prepare the |
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