Question

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

1.		It sold land having a fair value of $901,000 in exchange for a 4-year zero-interest-bearing promissory note in the face amount of $1,417,737. The land is carried on Metlock's books at a cost of $592,800.
2.		It rendered services in exchange for a 3%, 8-year promissory note having a face value of $403,820 (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.)

No.	Date	Account Titles and Explanation	Debit	Credit
1.	July 1, 2020	enter an account title	enter a debit amount	enter a credit amount
		enter an account title	enter a debit amount	enter a credit amount
		enter an account title	enter a debit amount	enter a credit amount
		enter an account title	enter a debit amount	enter a credit amount
2.	July 1, 2020	enter an account title	enter a debit amount	enter a credit amount
		enter an account title	enter a debit amount	enter a credit amount
		enter an account title	enter a debit amount	enter a credit amount

Answer 1

The answer has been presented in the supporting sheet. For detailed answer refer to the supporting sheet.

Answer No Debit Date 1 July 1,2020. Credit 1417737 Account Title and Explanation Promissory Note Receivable Discount on Note receivable (1417737-901000) Land Gain on sale of land (901000-592800) Promissory Note Receivable Discount on Note Payable (403820-223726) Sales Revenue 516737 592800 308200 2 July 1,2020. 403820 180094 223726 Sale value of services = (interest income * present value annuity (12%,8))+(face value /(1.12)^8) -= (403820"3%)*((1-(1.12)^-8)/0.12))+(403820/1.1248) = (12114.6*4.96764)+(403820*.40388) - = $ 223276 For any help please comment in the comment box Note interest rate of 12 % has been used as these are the interest rate for customers as credit has been given to them