On July 1, 2020, Marin Inc. made two sales:

1. It sold excess land in exchange for a four-year, non–interest-bearing promissory note in the face amount of $1,165,880. The land’s carrying value is $640,000.

2. It rendered services in exchange for an eight-year promissory note having a face value of $480,000. Interest at a rate of 2% is payable annually.

The customers in the above transactions have credit ratings that require them to borrow money at 11% interest. Marin recently had to pay 7% interest for money it borrowed from British Bank.

3.
On July 1, 2020, Marin also agreed to accept an instalment note from one of its customers in partial settlement of accounts receivable that were overdue. The note calls for four equal payments of $21,000, including the principal and interest due, on the anniversary of the note. The implied interest rate on this note is 9%.

Required:

1. Prepare the journal entries to record the three notes receivable transactions of Marin Inc. on July 1, 2020.

2. Prepare an instalment note receivable schedule for the instalment note obtained in partial collection of accounts receivable.

Transcribed Image Text:TABLE PV.2 Present Value of an Annuity of 1 PV=1-1(1+i)ni (n) Periods 2% 22% 3% 4% 5% 6% 7% 8% 9% 10% 11% 12% 15% 1 0.98039 0.97561 0.97087 0.96154 0.95238 0.94340 0.93458 0.92593 0.91743 0.90909 0.90090 0.89286 0.86957 2 1.94156 1.92742 1.91347 1.88609 1.85941 1.83339 1.80802 1.78326 1.75911 1.73554 1.71252 1.69005 1.62571 3 2.88388 2.85602 2.82861 2.77509 2.72325 2.67301 2.62432 2.57710 2.53130 2.48685 2.44371 2.40183 2.28323 4 3.80773 3:76197 3:71710 3.62990 3.54595 3.46511 3.38721 3.31213 3.23972 3.16986 3.10245 3.03735 2.85498 4:71346 4.64583 4:57971 4.45182 4.32948 4.21236 4.10020 3.99271 3.88965 3.79079 3.69590 3.60478 3.35216 5.60143 5-50813 5.41719 5.24214 5.07569 4.91732 4:76654 4.62288 4.48592 4.35526 4.23054 4.11141 3-78448 7 6.47199 6.34939 6.23028 6.00205 5.78637 5:58238 5.38929 5.20637 5.03295 4.86842 4.71220 4.56376 4.16042 8 7.32548 7.17014 7.01969 6.73274 6.46321 6.20979 5.97130 5.74664 5:53482 5.33493 5.14612 4.96764 4.48732 9 8.16224 7.97087 7.78611 7.43533 7.10782 6.80169 6.51523 6.24689 5.99525 5-75902 5-53705 5-32825 4.77158 10 8.98259 8.75206 8.53020 8.11090 7.72173 7:36009 7.02358 6.71008 6.41766 6.14457 5.88923 5.65022 5.01877 11 9.78685 9.51421 9.25262 8.76048 8.30641 7.88687 7.49867 7.13896 6.80519 6.49506 6.20652 5.93770 5.23371 12 10.57534 10.25776 9.95400 9.38507 8.86325 8.38384 7.94269 7-53608 7.16073 6.81369 6.49236 6.19437 5.42062 13 11.34837 10.98319 10.63496 9.98565 9.39357 8.85268 8.35765 7.90378 7.48690 7.10336 6.74987 6.42355 5.58315 14 12.10625 11.69091 11.29607 10.56312 9.89864 9.29498 8.74547 8.24424 7-78615 7.36669 6.98187 6.62817 5-72448 15 12.84926 12.38138 11.93794 11.11839 10.37966 9.71225 9.10791 8.55948 8.06069 7.60608 7.19087 6.81086 5.84737 16 13.57771 13.05500 12.56110 11.65230 10.83777 10.10590 9.44665 8.85137 8.31256 7.82371 7.37916 6.97399 5.95424
Transcribed Image Text:(n) periods 2% 22% 3% 4% 5% 6% 7% 8% 9% 10% 11% 12% 15% 1 0.98039 0.97561 0.97087 o.96156 0.95238 0.94340 0.93458 0.92593 0.91743 0.90909 0.90090 0.89286 0.86957 2 0.96117 0.95181 0.94260 0.92456 0.90703 0.89000 0.87344 0.85734 0.84168 0.82645 0.81162 0.79719 0.75614 3 0.94232 0.92860 0.91514 0.88900 0.86384 0.83962 0.81630 0.79383 0.77218 0.75132 0.73119 0.71178 0.65752 4 0.92385 0.90595 0.88849 0.85480 0.82270 0.79209 0.76290 0.73503 0.70843 0.68301 0.65873 0.63552 0.57175 5 0.90583 0.88385 0.86261 0.82193 0.78353 0.74726 0.71299 0.68058 0.64993 0.62092 0.59345 0.56743 0.49718 6 0.88797 0.86230 0.83748 0.79031 0.74622 0.70496 0.66634 0.63017 0.59627 0.56447 0.53464 0.50663 0.43233 7 0.87056 0.84127 0.81309 0.75992 0.71068 0.66506 0.62275 0.58349 0.54703 0.51316 0.48166 0.45235 0.37594 8 0.85349 0.82075 0.78941 0.73069 0.67684 0.62741 0.58201 0.54027 0.50187 0.46651 0.43393 0.40388 0.32690 0.83676 0.80073 0.76642 0.70259 0.64461 0.59190 0.54393 0.50025 0.46043 0.42410 0.39092 0.36061 0.28426 10 0.82035 0.78120 0.74409 0.67556 0.61391 0.55839 0.50835 0.46319 0.42241 0.38554 0.35218 0.32197 0.24719 11 0.80426 0.76214 0.72242 0.64958 0.58468 0.52679 0.475o9 0.42888 0.38753 0.35049 0.31728 0.28748 0.21494 12 0.78849 0.74356 0.70138 0.62460 0.55684 0.49697 0.44401 0.39711 0.35554 0.31863 0.28584 0.25668 0.18691 13 0.77303 0.72542 0.68095 0.60057 0.53032 0.46884 0.41496 0.36770 0.32618 0.28966 0.25751 0.22917 0.16253 14 0.75788 0.70773 0.66112 0.57748 0.50507 0.44230 0.38782 0.34046 0.29925 0.26333 0.23199 0.20462 0.14133 15 0.74301 0.69047 0.64186 o.55526 0.48102 0.41727 0.36245 0.31524 0.27454 0.23939 0.20900 0.18270 0.12289 16 0.72845 0.67362 0.62317 0.53391 0.45811 0.39365 0.33873 0.29189 0.25187 0.21763 0.18829 0.16312 0.10687 17 0.71416 0.65720 0.60502 0.51337 0.43630 0.37136 0.31657 0.27027 0.23107 0.19785 o.16963 0.14564 0.09293 18 0.70016 0.64117 0.58739 0.49363 0.41552 0.35034 0.29586 0.25025 0.21199 0.17986 0.15282 0.13004 0.08081 19 0.68643 0.62553 0.57029 0.47464 0.39573 0.33051 0.27651 0.23171 0.19449 0.16351 0.13768 0.11611 0.07027 20 0.67297 0.61027 0.55368 0.45639 0.37689 0.31180 0.25842 0.21455 0.17843 0.14864 0.12403 0.10367 0.06110

Question

On July 1, 2020, Marin Inc. made two sales:

1.		It sold excess land in exchange for a four-year, non–interest-bearing promissory note in the face amount of $1,165,880. The land’s carrying value is $640,000.
2.		It rendered services in exchange for an eight-year promissory note having a face value of $480,000. Interest at a rate of 2% is payable annually.

The customers in the above transactions have credit ratings that require them to borrow money at 11% interest. Marin recently had to pay 7% interest for money it borrowed from British Bank.

3.

On July 1, 2020, Marin also agreed to accept an instalment note from one of its customers in partial settlement of accounts receivable that were overdue. The note calls for four equal payments of $21,000, including the principal and interest due, on the anniversary of the note. The implied interest rate on this note is 9%.

Required:

1. Prepare the journal entries to record the three notes receivable transactions of Marin Inc. on July 1, 2020.

2. Prepare an instalment note receivable schedule for the instalment note obtained in partial collection of accounts receivable.

TABLE PV.2 Present Value of an Annuity of 1
PV=1-1(1+i)ni
(n)
Periods
2%
22%
3%
4%
5%
6%
7%
8%
9%
10%
11%
12%
15%
1
0.98039 0.97561 0.97087 0.96154 0.95238 0.94340 0.93458 0.92593 0.91743 0.90909 0.90090 0.89286 0.86957
2
1.94156
1.92742
1.91347
1.88609
1.85941 1.83339 1.80802 1.78326
1.75911
1.73554
1.71252
1.69005
1.62571
3
2.88388 2.85602 2.82861 2.77509
2.72325 2.67301 2.62432 2.57710 2.53130 2.48685 2.44371 2.40183
2.28323
4
3.80773 3:76197
3:71710 3.62990 3.54595 3.46511 3.38721 3.31213 3.23972 3.16986 3.10245 3.03735
2.85498
4:71346 4.64583 4:57971
4.45182 4.32948 4.21236 4.10020 3.99271 3.88965 3.79079 3.69590 3.60478
3.35216
5.60143 5-50813 5.41719
5.24214 5.07569 4.91732
4:76654 4.62288 4.48592 4.35526 4.23054
4.11141
3-78448
7
6.47199 6.34939 6.23028 6.00205 5.78637 5:58238 5.38929 5.20637 5.03295 4.86842 4.71220 4.56376
4.16042
8
7.32548 7.17014 7.01969
6.73274 6.46321 6.20979 5.97130 5.74664 5:53482 5.33493 5.14612 4.96764
4.48732
9
8.16224 7.97087 7.78611
7.43533
7.10782 6.80169 6.51523 6.24689 5.99525 5-75902 5-53705 5-32825
4.77158
10
8.98259 8.75206 8.53020 8.11090
7.72173 7:36009 7.02358 6.71008 6.41766 6.14457 5.88923 5.65022
5.01877
11
9.78685 9.51421 9.25262 8.76048 8.30641 7.88687 7.49867 7.13896 6.80519 6.49506 6.20652 5.93770
5.23371
12
10.57534 10.25776 9.95400 9.38507 8.86325 8.38384 7.94269 7-53608 7.16073 6.81369 6.49236 6.19437
5.42062
13
11.34837 10.98319 10.63496 9.98565 9.39357 8.85268 8.35765 7.90378 7.48690 7.10336 6.74987 6.42355
5.58315
14
12.10625 11.69091 11.29607 10.56312 9.89864 9.29498 8.74547 8.24424 7-78615 7.36669 6.98187 6.62817
5-72448
15
12.84926 12.38138 11.93794 11.11839 10.37966 9.71225
9.10791 8.55948 8.06069 7.60608 7.19087 6.81086
5.84737
16
13.57771 13.05500 12.56110 11.65230 10.83777 10.10590 9.44665 8.85137 8.31256 7.82371 7.37916 6.97399
5.95424

(n)
periods
2%
22%
3%
4%
5%
6%
7%
8%
9%
10%
11%
12%
15%
1
0.98039 0.97561 0.97087 o.96156 0.95238 0.94340 0.93458 0.92593 0.91743 0.90909 0.90090 0.89286 0.86957
2
0.96117 0.95181 0.94260 0.92456 0.90703 0.89000 0.87344 0.85734 0.84168 0.82645 0.81162 0.79719 0.75614
3
0.94232 0.92860 0.91514 0.88900 0.86384 0.83962 0.81630 0.79383 0.77218 0.75132 0.73119 0.71178 0.65752
4
0.92385 0.90595 0.88849 0.85480 0.82270 0.79209 0.76290 0.73503 0.70843 0.68301 0.65873 0.63552 0.57175
5
0.90583 0.88385 0.86261 0.82193 0.78353 0.74726 0.71299 0.68058 0.64993 0.62092 0.59345 0.56743 0.49718
6
0.88797 0.86230 0.83748 0.79031 0.74622 0.70496 0.66634 0.63017 0.59627 0.56447 0.53464 0.50663 0.43233
7
0.87056 0.84127 0.81309 0.75992 0.71068 0.66506 0.62275 0.58349 0.54703 0.51316 0.48166 0.45235 0.37594
8
0.85349 0.82075 0.78941 0.73069 0.67684 0.62741 0.58201 0.54027 0.50187 0.46651 0.43393 0.40388 0.32690
0.83676 0.80073 0.76642 0.70259 0.64461 0.59190 0.54393 0.50025 0.46043 0.42410 0.39092 0.36061 0.28426
10
0.82035 0.78120 0.74409 0.67556 0.61391 0.55839 0.50835 0.46319 0.42241 0.38554 0.35218 0.32197 0.24719
11
0.80426 0.76214 0.72242 0.64958 0.58468 0.52679 0.475o9 0.42888 0.38753 0.35049 0.31728 0.28748 0.21494
12
0.78849 0.74356 0.70138 0.62460 0.55684 0.49697 0.44401 0.39711 0.35554 0.31863 0.28584 0.25668 0.18691
13
0.77303 0.72542 0.68095 0.60057 0.53032 0.46884 0.41496 0.36770 0.32618 0.28966 0.25751 0.22917 0.16253
14
0.75788 0.70773 0.66112 0.57748 0.50507 0.44230 0.38782 0.34046 0.29925 0.26333 0.23199 0.20462 0.14133
15
0.74301 0.69047 0.64186 o.55526 0.48102 0.41727 0.36245 0.31524 0.27454 0.23939 0.20900 0.18270 0.12289
16
0.72845 0.67362 0.62317 0.53391 0.45811 0.39365 0.33873 0.29189 0.25187 0.21763 0.18829 0.16312 0.10687
17
0.71416 0.65720 0.60502 0.51337 0.43630 0.37136 0.31657 0.27027 0.23107 0.19785 o.16963 0.14564 0.09293
18
0.70016 0.64117 0.58739 0.49363 0.41552 0.35034 0.29586 0.25025 0.21199 0.17986 0.15282 0.13004 0.08081
19
0.68643 0.62553 0.57029 0.47464 0.39573 0.33051 0.27651 0.23171 0.19449 0.16351 0.13768 0.11611
0.07027
20
0.67297 0.61027 0.55368 0.45639 0.37689 0.31180 0.25842 0.21455 0.17843 0.14864 0.12403 0.10367 0.06110

Accepted Answer

Notes Receivables:-It is a written legal document where one party promise to another party to pay…