Reference no: EM13481498

ConnecticutInc. had the following long-term receivable account balances atDecember 31, 2006.

Note receivable from sale ofdivision	$1,800,000
Note receivable from officer	400,000

Transactions during 2007 and otherinformation relating to Connecticut's long-term receivables were asfollows.

1. The $1,800,000 note receivable is dated May 1, 2006, bearsinterest at 9%, and represents the balance of the considerationreceived from the sale of Connecticut's electronics division to NewYork Company. Principal payments of $600,000 plus appropriateinterest are due on May 1, 2007, 2008, and 2009. The firstprincipal and interest payment was made on May 1, 2007. Collectionof the note installments is reasonably assured.
2. The $400,000 note receivable is dated December 31, 2006, bearsinterest at 8%, and is due on December 31, 2009. The note is duefrom Sean May, president of Connecticut Inc. and is collateralizedby 10,000 shares of Connecticut's common stock. Interest is payableannually on December 31, and all interest payments were paid ontheir due dates through December 31, 2007. The quoted market priceof Connecticut's common stock was $45 per share on December 31,2007.
3. On April 1, 2007, Connecticut sold a patent to PennsylvaniaCompany in exchange for a $200,000 zero-interest-bearing note dueon April 1, 2009. There was no established exchange price for thepatent, and the note had no ready market. The prevailing rate ofinterest for a note of this type at April 1, 2007, was 12%. Thepresent value of $1 for two periods at 12% is 0.797 (use thisfactor). The patent had a carrying value of $40,000 at January 1,2007, and the amortization for the year ended December 31, 2007,would have been $8,000. The collection of the note receivable fromPennsylvania is reasonably assured.
4. On July 1, 2007, Connecticut sold a parcel of land toHarrisburg Company for $200,000 under an installment sale contract.Harrisburg made a $60,000 cash down payment on July 1, 2007, andsigned a 4-year 11% note for the $140,000 balance. The equal annualpayments of principal and interest on the note will be $45,125payable on July 1, 2008, through July 1, 2011. The land could havebeen sold at an established cash price of $200,000. The cost of theland to Connecticut was $150,000. Circumstances are such that thecollection of the installments on the note is reasonablyassured.

Instructions:

1. Prepare the long-term receivables section of Connecticut'sbalance sheet at December 31, 2007.
2. Prepare a schedule showing the current portion of the long-termreceivables and accrued interest receivable that would appear inConnecticut's balance sheet at December 31, 2007.
3. Prepare a schedule showing interest revenue from the long-termreceivables that would appear on Connecticut's income statement forthe year ended December 31, 2007.