Question

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

1.		It sold land having a fair value of $908,350 in exchange for a 4-year zero-interest-bearing promissory note in the face amount of $1,429,302. The land is carried on Metlock's books at a cost of $593,500.
2.		It rendered services in exchange for a 3%, 8-year promissory note having a face value of $403,990 (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

No.	Date	Account Titles and Explanation	Debit	Credit
1	July 1, 2020	Notes Receivable	1,429,302
		Land		593,500
		Discount on Notes Receivable		520,952	balance
		Gain on Disposal of Land		314,850	(908,350 - 593,500)
2	July 1, 2020	Notes Receivable	403,990
		Discount on Notes Receivable		180,620
		Service Revenue		223,370
	Working
		Present Value of Notes Receivable
		Face Value ($403,990 x 0.40388)	163,163.48
		Interest (12,119.70 x 4.96764)	60,206.31
			223,370