Reference no: EM132768908

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%.

Reuired:

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

Problem b. complete an instalment note receivable schedule for the instalment note obtained in partial collection of accounts receivable.