Reference no: EM132594928
Question - On September 1, 2019, Crispin had performed a significant amount of market consulting services for Cortland Ltd. Cortland was short of cash so Crispin agreed to accept an instalment note. The note calls for four equal annual principal payments of $50,000 plus interest for each year of the four-year term of the note (the first payment is September 1, 2020). The implied interest rate on this note is 9%.
Required - Prepare the Crispin's journal entry to record the transaction on September 1, 2019 and at the company's December 31 year-end if needed.
Crispin also held the following items on December 31, 2019
a) A commercial savings account with $55,000 and a commercial chequing account balance of $135,000 are held at Fruit First Bank.
b) A separate cash investment in the amount of $800,000 is held only for the retirement of long-term debt as required by the debt agreement.
c) Company executives have been given $8,000 cash as travel advances for corporate travel for the first quarter of next year (These employees will complete expense reports to account for this money after they travel). d) There is a petty cash fund of $1,000.
Required - How should the note receivable and the four points listed above be reported/classified on Crispin Corp.'s statement of financial position as at December 31, 2019?