On April 1, 2018, the Apex Corporation sold a parcel of underdeveloped land to the Applegate ConstructionCompany for $2,400,000. The book value of the land on Apex’s books was $480,000. Terms of the sale required adown payment of $120,000 and 19 annual payments of $120,000 plus interest at an appropriate interest rate due oneach April 1 beginning in 2019. Apex has no significant obligations to perform services after the sale.Required:1. Prepare the necessary entries for Apex to record the sale, receipt of the down payment, and receipt of the firstinstallment assuming that Apex is able to make a reliable estimate of possible uncollectible amounts (that is,profit is recognized upon delivery). Ignore interest charges.2. Repeat requirement 1 assuming that Apex cannot make a reliable estimate of possible uncollectible amountsand decides to use the installment sales method for profit recognition
On April 1, 2018, the Apex Corporation sold a parcel of underdeveloped land to the Applegate Construction
Company for $2,400,000. The book value of the land on Apex’s books was $480,000. Terms of the sale required a
down payment of $120,000 and 19 annual payments of $120,000 plus interest at an appropriate interest rate due on
each April 1 beginning in 2019. Apex has no significant obligations to perform services after the sale.
Required:
1. Prepare the necessary entries for Apex to record the sale, receipt of the down payment, and receipt of the first
installment assuming that Apex is able to make a reliable estimate of possible uncollectible amounts (that is,
profit is recognized upon delivery). Ignore interest charges.
2. Repeat requirement 1 assuming that Apex cannot make a reliable estimate of possible uncollectible amounts
and decides to use the installment sales method for profit recognition
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