1. It sold land having a fair value of $905,000 in exchange for a 3-year zero-interest-bearing promissory note in the face amount of $1,237,708. The land is carried on Rentoulâs books at a cost of $596,000.
2. It rendered services in exchange for a 4%, 6-year promissory note having a face value of $409,600.
Rentoul Inc. recently had to pay 8% interest for money that it borrowed from British National Bank. The customers in these two transactions have credit ratings that require them to borrow money at 11% interest.
Record the two journal entries that should be recorded by Rentoul Inc. for the sales transactions above that took place on July 1, 2012.
1. Should have 4 recorded transactions,
2. Should have 3 recorded transaction.