Question

On October 1, Bandor Company sold land (that cost $30,000) on credit for $35,000. The buyer issued an 8%, 12-month note for this amount, with the interest to be paid on the maturity date.

Answer 1

Answer:

Check the explanation

Step-by-step explanation:

Journal entries are as follows:-

Date                 Account Titles                Debit                     Credit

Oct-01.            8% Note Receivable      $35,000.00

                                  Land                                                     $30,000.00  

                             Gain on sale                                             $5,000.00

                             (Sale of Land)  

Dec-31                 Interest Receivable          $700.00

                            Interest Revenue                                         $700.00

            (Interest revenue on Note for 3 mon. recognized)    

                      ($35,000 * 8% *3/12 = $700)