HMD Corporation entered into the following transactions during the year 2010:
1. The company sold land having a fair market value of $700,000 in exchange for a four year non-interest bearing promissory note in ‘he face amount of $1,101,460. The land is carried on EMD Corporation's books at a cost of $620,000.
2. The company rendered services in exchange for a 3%, 8-year promissory note having a face value of $300,000 (interest payable annually).
3, The company sold some of its product and accepted a three-year, $340,000 non-interest bearing note- The product sold was carried on the books of EMD Corporation at a manufactured cost of $190,000.
EMD Corporation recently had to pay 8% interest for money that it borrowed. The purchaser and customers in the transactions described above have credit ratings that require that they pay 12% for their borrowed funds.
Prepare the journal entries to record each of the three transactions described above.
The question belongs to Accounting and it discusses about preparing journal entries for a company that has sold its land in exchange for a four year non-interest bearing promissory note.
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