On July 1, 2014, Agincourt Inc. made two sales.

1. It sold land having a fair value of $918,000 in exchange for a 4-year zero-interest-bearing promissory note in the face amount of $1,393,591. The land is carried on Agincourt's books at a cost of $600,100.

2. It rendered services in exchange for a 5%, 8-year promissory note having a face value of $404,300 (interest payable annually).

Agincourt 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.

Required:

Record the two journal entries that should be recorded by Agincourt Inc. for the sales transactions above that took place on July 1, 2014.

Explanation:

Date                   Account title and Explanation     Debit      Credit

1st july-14                  Notes receivable             $1,393,591

                         Discount on notes receivable                                                                     ($1,393,591 - S600,100 - $317,900)                  $475,591

                                                Land                                           $600,100

                                   Gain on disposal of land                                                 `                        ($918,000 - $600,100)                               $317,900  `                                           (To record sale of land)

1-Jul-14

                                  Notes receivable                 $404,300

                                   Service revenue                                  $404,300

`                               (to record service revenue)