Problem:
Can you help me get started with this assignment?
Transactions during 2007 for Clarey Inc were as follows:
Question 1: On April 1, 2007, Clarey sold a parcel of land to Hermes Co for $400,000 under an installment note contract. Hermes made a $100,000 down payment on April 1, 2007 and signed a 5 year 12% note for the $300,000 balance. Payments are to be made annually on April 1st for five years plus interest.
Question 2: On January 1, 2006, Clarey exchanged equipment for a $400,000 zero-interest-bearing note due on January 1, 2009. The prevailing rate of interest for this type note was 10%. The present value factor for three period is .75.
Prepare schedules showing the following as of December 31, 2007:
a. Current receivables
b. Long-term receivables
c. Interest income
d. Accrued interest