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Question - This year, the company sold land for a non-interest bearing note. The note calls for annual payments of $20,000 for 4 years. The payments will begin one year from the date of the sale. An appropriate rate of interest for this type of note is 5%. The land had an original purchase cost of $75,000. The CFO told the accounting department to record the sale as follows:

Notes Receivable $80,000

Land $75,000

Gain on Sale of Land $ 5,000

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Reference no: EM133171286

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