>> Accounting Basics
On January 1, 2010, 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, 2010 and 2011. 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, 2010, Seaver Company sold a building to Hane Company, accepting a two year, $100,000 non interest bearing note due July 1, 2012. 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, 2005, and had a book value of $67,500 on December 31, 2009. It was being depreciated on a straight line basis (no residual value) over a 20 year life.
1. Prepare all the journal entries on Seaver Company's books for January 1, 2010 through December 31, 2011, in regard to the Bench Company note.
2. Prepare all the journal entries on Seaver Company's books for July 1, 2010 through July 1, 2012, in regard to the Hane Company note.
3. Prepare the notes receivable portion of the Seaver Company's balance sheet on December 31, 2010 and 2011.