Question

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

1.		It sold land having a fair value of $905,820 in exchange for a 4-year zero-interest-bearing promissory note in the face amount of $1,425,321. The land is carried on Indigo's books at a cost of $599,100.
2.		It rendered services in exchange for a 3%, 8-year promissory note having a face value of $409,970 (interest payable annually).

Indigo 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 Indigo Inc. for the sales transactions above that took place on July 1, 2020.

No.	Date	Account Titles and Explanation	Debit	Credit
1.	July 1, 2020	Notes receivable
		land
		discount on notes receivable
		gain on disposable land
2.	July 1, 2020	notes receivable
		service revenue
		discounts on notes receivable

Answer 1

Solution Date Particulars Debit Gedet 1 July 2020 1425321 599100 Notes receivable To Land To Discount on Notes - receivable 21475321-905820] To Spain on sale [905820 - 5991001 519501 306720 July 2020 409970 Notes recervable TO DIS count on Notes ueceivable To Service Revenue 183294 226676

W.NO n = 8 Years is 120%. flow . - Cash I Amount present value 12299 Interest [409920X34 61097 [12299 x 4.96764] principal 409970 165579 [409970 X0•40388] price of bondę 226676