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.

Required: 

Prepare the journal entries to record each of the three transactions described above.

Answer rating: 100% (QA)

1 Notes Receivable 1101460 Loss on Sale of Land 218540 Sales 7... View the full answer