On July 1, 2020, Splish Inc. made two sales. 1. It sold land having a fair value of $909,120 in exchange for a 4-year zero-interest-bearing promissory note in the face amount of $1,430,514. The land is carried on Splish's books at a cost of $597,100. 2. It rendered services in exchange for a 3%, 8-year promissory note having a face value of $401,050 (interest payable annually). Splish 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 12% interest. Record the two journal entries that should be recorded by Splish Inc. for the sales transactions above that took place on July 1, 2020.
On July 1, 2020, Splish Inc. made two sales. 1. It sold land having a fair value of $909,120 in exchange for a 4-year zero-interest-bearing promissory note in the face amount of $1,430,514. The land is carried on Splish's books at a cost of $597,100. 2. It rendered services in exchange for a 3%, 8-year promissory note having a face value of $401,050 (interest payable annually). Splish 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 12% interest. Record the two journal entries that should be recorded by Splish Inc. for the sales transactions above that took place on July 1, 2020.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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On July 1, 2020, Splish Inc. made two sales.
| 1. | It sold land having a fair value of $909,120 in exchange for a 4-year zero-interest-bearing promissory note in the face amount of $1,430,514. The land is carried on Splish's books at a cost of $597,100. | |
| 2. | It rendered services in exchange for a 3%, 8-year promissory note having a face value of $401,050 (interest payable annually). |
Splish 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 12% interest.
Record the two
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