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Question 2 View Policies Current Attempt in Progress On July 1, 2020, Metlock Inc. made two sales. 1. It sold land having a fair value of $919,890 in exchange for a 4-year zero-interest-bearing promissory note in the face amount of $1,447,460. The land is carried on Metlock's books at a cost of $599,700. 2. It rendered services in exchange for a 3%, 8-year promissory note having a face value of $404.320 (interest payable annually). Metlock 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 Metlock Inc. for the sales transactions above that took place on July 1, 2020. (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and final answers to decimal places, eg 5,275. If no entry is required, select "No Entry" for the account titles and enter for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually.) No. Date Account Titles and Explanation Debit Credit 1. July 1, 2020 2. July 1, 2020 e Textbook and Media List of Accounts Save for Later Attempts: 0 of 3 used Submit Answer

On July 1, 2020, Metlock Inc. made two sales.

1.       It sold land having a fair value of $919,890 in exchange for a 4-year zero-interest-bearing promissory note in the face amount of $1,447,460. The land is carried on Metlock's books at a cost of $599,700.
2.       It rendered services in exchange for a 3%, 8-year promissory note having a face value of $404,320 (interest payable annually).

Metlock 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 Metlock Inc. for the sales transactions above that took place on July 1, 2020. (Round present value factor calculations to 5 decimal places, e.g. 1.25124 and final answers to 0 decimal places, e.g. 5,275. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts. Credit account titles are automatically indented when the amount is entered. Do not indent manually.)

Answer 1

No.	Date	Account Titles and Explanation	Debit	Credit
1	July 1, 2020	Notes Receivable	$1,447,460
		Discount on Notes Receivable		$527,570
		Land		$599,700
		Gain on Sale of Land		$320,190	Balance
		Working
		Maturity Value		$1,447,460
		Present value of Note Face Value		$919,890
		$1,447,460 x 0.63552 i.e. (PVF 4, 12%)
		Discount on notes receivable		$527,570
2	July 1, 2020	Notes Receivable	$404,320
		Discount on Notes Receivable		$180,768
		Service Revenue		$223,552
		Working
		Maturity Value		$404,320
		Present value of Note Face Value	$163,297
		$404,320 x 0.40388 i.e. (PVF 8, 12%)
		Present value of Notes Interest	$60,255
		$12,129.60 x 4.96764
				$223,552
		Discount on notes receivable		$180,768