1. In 2008, Abe’s Mascot Action Figures Co. recently sold land with a fair market value of $496,736 to Uga Dog Biscuits Co. In 2001, Aubrey had purchased the land for $600,000. In exchange for the land, Uga gave Aubrey a 5 year zero-interest-bearing promissory note in the face amount of $800,000. Aubrey usually borrows money at an 8% rate; while Uga usually borrows at a 10% rate. Record Abe’s journal entry for the land sale.

2. On 12/31/06, Nova Engineering provides engineering services in exchange for a 4 year, non-interest bearing note, with 10,000 to be paid at the end of each year. The customer’s normal borrowing rate is 8%.

Record the journal entry that Nova should make on December 31, 2006.

3. On 12/31/07, Nova Engineering provides engineering services in exchange for a 3 year, promissory note with a face value of 80,000, with a stated interest rate of 8%. Assume that given all the circumstances, a 10% interest rate would have been appropriate.

Record the journal entry that Nova should make on December 31, 2007.