On January 1, 2007 Seaver Company sold land with a book value of $23,000 to Bench Company.

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On January 1, 2007 Seaver Company sold land with a book value of $23,000 to Bench Company. Bench Company paid $15,000 down and signed a $15,000 non-interest-bearing note, payable in two $7,500 annual installments on December 31, 2007 and 2008. Neither the fair value of the land nor of the note is determinable. Bench Company’s incremental borrowing rate is 12%. Later in the year, on July 1, 2007, Seaver Company sold a building to Hane Company, accepting a two-year, $100,000 non-interest-bearing note due July 1, 2009. The fair value of the building was $82,644.60 on the date of the sale. The building had been purchased at a cost of $90,000 on January 1, 2002, and had a book value of $67,500 on December 31, 2006. It was being depreciated on a straight-line basis (no residual value) over a 20-year life.


Required

1. Prepare all the journal entries on Seaver Company’s books for January 1, 2007 through December 31, 2008 in regard to the Bench Company note.

2. Prepare all the journal entries on Seaver Company’s books for July 1, 2007 through July 1, 2009 in regard to the Hane Company note.

3. Prepare the notes receivable portion of the Seaver Company’s balance sheet on December 31, 2007 and 2008.


Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...
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Intermediate Accounting

ISBN: 978-0324300987

10th Edition

Authors: Loren A Nikolai, D. Bazley and Jefferson P. Jones

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