Weldon Corporation’s fiscal year ends December 31. The following is a list of transactions involving receivables that occurred during 2021:Aug. 31 Sold stock in a nonpublic company with a book value of $5,800 and accepted a $6,800 noninterest-bearing note with a discount rate of 9%. The $6,800 payment is due on February 28, 2022. The stock has no ready market value.Prepare journal entries for the above transaction

Question
Asked Oct 23, 2019

Weldon Corporation’s fiscal year ends December 31. The following is a list of transactions involving receivables that occurred during 2021:

Aug.   31   Sold stock in a nonpublic company with a book value of $5,800 and accepted a $6,800 noninterest-bearing note with a discount rate of 9%. The $6,800 payment is due on February 28, 2022. The stock has no ready market value.

Prepare journal entries for the above transaction

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Expert Answer

Step 1

Compute the gain on sale of inv...

Amount (S)
$6,800
Particulars
Notes receivable
Less: Discount on note receivable (S6,800 x 9%)
Selling price
Gain on sale of Investments
$612
S5,800
$388
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Amount (S) $6,800 Particulars Notes receivable Less: Discount on note receivable (S6,800 x 9%) Selling price Gain on sale of Investments $612 S5,800 $388

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