Question

Pronghorn Inc. had the following long-term receivable account balances at December 31, 2016.

Note receivable from sale of division		$2,100,000
Note receivable from officer		423,000

Transactions during 2017 and other information relating to Pronghorn’s long-term receivables were as follows.

1.		The $2,100,000 note receivable is dated May 1, 2016, bears interest at 9%, and represents the balance of the consideration received from the sale of Pronghorn’s electronics division to New York Company. Principal payments of $700,000 plus appropriate interest are due on May 1, 2017, 2018, and 2019. The first principal and interest payment was made on May 1, 2017. Collection of the note installments is reasonably assured.
2.		The $423,000 note receivable is dated December 31, 2016, bears interest at 8%, and is due on December 31, 2019. The note is due from Sean May, president of Pronghorn Inc. and is collateralized by 10,575 shares of Pronghorn’s common stock. Interest is payable annually on December 31, and all interest payments were paid on their due dates through December 31, 2017. The quoted market price of Pronghorn’s common stock was $46 per share on December 31, 2017.
3.		On April 1, 2017, Pronghorn sold a patent to Pennsylvania Company in exchange for a $136,000 zero-interest-bearing note due on April 1, 2019. There was no established exchange price for the patent, and the note had no ready market. The prevailing rate of interest for a note of this type at April 1, 2017, was 13%. The present value of $1 for two periods at 13% is 0.783 (use this factor). The patent had a carrying value of $54,400 at January 1, 2017, and the amortization for the year ended December 31, 2017, would have been $10,880. The collection of the note receivable from Pennsylvania is reasonably assured.
4.		On July 1, 2017, Pronghorn sold a parcel of land to Splinter Company for $213,400 under an installment sale contract. Splinter made a $64,020 cash down payment on July 1, 2017, and signed a 4-year 12% note for the $149,380 balance. The equal annual payments of principal and interest on the note will be $42,767 payable on July 1, 2018, through July 1, 2021. The land could have been sold at an established cash price of $213,400. The cost of the land to Pronghorn was $163,400. Circumstances are such that the collection of the installments on the note is reasonably assured.

Prepare a schedule showing the current portion of the long-term receivables and accrued interest receivable that would appear in Pronghorn’s balance sheet at December 31, 2017.

Please show any work.

Answer 1

Selected balance sheet balances
Current portion of long term receivables section
Notes receivable from sale of blue’s electronics division ( only current instalment due is considered)	700,000
Installment contract receivable	24841
Total current portion of long term receivables	724,841

Accrued Interest receivable section
Notes receivable from sale of blue’s electronics division [1,400,000*9%*8/12]	84000
Installment contract receivable [[149380*12%*6/12]	8963
Total accrued	92963

Workings:

Sale of land to splinter company
Installment receivable	213400
Less: Down payment	64020
Balance to be received	149380
Interest receivable [42767 - (149380*12%)]	24841

Sale of Pronghorn’s electronics division to New York Company
Sale consideration	2,100,000
Less: Instalment received on May 1,2017	700,000
Balance to be received	1,400,000
Interest for 8 months @9% [1,400,000*9%*8/12]	84000

Any doubt please comment.