Question

On October 1, Bandor Company sold land (that cost $30,000) on credit for $35,000. The buyer issued an 8%, 12-month note for this amount, with the interest to be paid on the maturity date. Required: Prepare journal entries to record the sale of the land and the related year-end adjusting entry.

Answer 1

Date Account Titles Debit Credit

Oct 01 8% Note Receivables $35,000

Land $30,000

Gain on sale $5,000

(To record the sale of the land)

Dec 31 Interest receivable $700

Interest Revenue $700

(35,000*8%*3/12)

(To record Interest Revenue on Note for 3 month recognized)