Prepare all necessary entries in general journal form for Garfield Corp. E6.13 (LO 4) (Note Transactions at Unrealistic Interest Rates) On July 1, 2025, Agincourt Inc. made two sales. 1. It sold land having a fair value of $700,000 in exchange for a 4-year zero-interest-bearing promissory note in the face amount of $1,101,460. The land is carried on Agincourt's books at a cost of $590,000. 2. It rendered services in exchange for a 3%, 8-year promissory note having a face value of $400,000 (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 12% interest.

Prepare all necessary entries in general journal form for Garfield Corp. E6.13 (LO 4) (Note Transactions at Unrealistic Interest Rates) On July 1, 2025, Agincourt Inc. made two sales. 1. It sold land having a fair value of $700,000 in exchange for a 4-year zero-interest-bearing promissory note in the face amount of $1,101,460. The land is carried on Agincourt's books at a cost of $590,000. 2. It rendered services in exchange for a 3%, 8-year promissory note having a face value of $400,000 (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 12% interest.

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

Chapter13: Investments And Long-term Receivables

Section: Chapter Questions

Problem 10MC: On January 1, 2019, Park Company accepted a 36,000, non-interest-bearing, 3-year note from a major...

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On January 1, 2020, CPA Co. sold land with carrying amount of P1,8o00,000 in exchange for a 1o-month, 10% note with face value of P2,000,000. On May 1, 2020, the entity discounted the note with recourse. The bank discount rate is 12%. The discounting transaction is accounted for as a secured borrowing. On November 1, 2020, the maker dishonored the note receivable. The entity paid the bank the maturity value of the note plus protest fee of P10,000. On December 1, 2020, the entity collected the dishonored note receivable in full plus 12% annual interest on the total amount due. How much cash was collected on December 1? (Round off to two decimal places.)
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On January 1 2020, Machete Company sold land with a carrying amount of P1 500 000 in exchange for a 9 month 10% note with face value of P2 000 000. The 10% rate properly reflects the time value of money for this type of note. On April 1 2020 the entity discounted the note with recourse. The bank discount rate is 12%. The discounting transaction is accounted for as a secured borrowing. On October 1 2020, the make dishonored the note receivable. The entity paid the bank the maturity value of the note plus the protest fee of P10 000. On December 31 2020, the entity collected the dishonored note receivable in full plus 12% annual interest on the total amount due. Required: Prepare journal entries to record the transaction.
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