On April 1, 2018, the Apex Corporation sold a parcel of underdeveloped land to the Applegate Construction

Question:

On April 1, 2018, the Apex Corporation sold a parcel of underdeveloped land to the Applegate Construction Company for $2,400,000. The book value of the land on Apex's books was $480,000. Terms of the sale required a down payment of $120,000 and 19 annual payments of $120,000 plus interest at an appropriate interest rate due on each April 1 beginning in 2019. Apex has no significant obligations to perform services after the sale.

Required:

1. Prepare the necessary entries for Apex to record the sale, receipt of the down payment, and receipt of the first installment assuming that Apex is able to make a reliable estimate of possible uncollectible amounts (that is, profit is recognized upon delivery). Ignore interest charges.

2. Repeat requirement 1 assuming that Apex cannot make a reliable estimate of possible uncollectible amounts and decides to use the installment sales method for profit recognition.

Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...
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Intermediate Accounting

ISBN: 9781259722660

9th Edition

Authors: J. David Spiceland, James Sepe, Mark Nelson, Wayne Thomas

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