Linden, Inc., had the following long-term receivable account balances at December 31, 2006:

Note receivable from sale of division ... $1,500,000

Note receivable from officer ........ 400,000

Transactions during 2007 and other information relating to Linden’s long-term receivables were as follows:

1. The $1,500,000 note receivable is dated May 1, 2006, bears interest at 9%, and represents the balance of the consideration received from the sale of Linden’s electronics division to Pitt Company. Principal payments of $500,000 plus appropriate interest are due on May 1, 2007, 2008, and 2009. The first principal and interest payment was made on May 1, 2007. Collection of the note installments is reasonably assured.

2. The $400,000 note receivable is dated December 31, 2004, bears interest at 8%, and is due on December 31, 2009. The note is due from Robert Finley, president of Linden, Inc., and is collateralized by 10,000 shares of Linden’s common stock. Interest is payable annually on December 31, and all interest payments were paid on their due dates through December 31, 2007. The quoted market price of Linden’s common stock was $45 per share on December 31, 2007.

3. On April 1, 2007 Linden sold a patent to Bell Company in exchange for a $100,000 non-interest-bearing note due on April 1, 2009. There was no established exchange price for the patent, and the note had no ready market. The prevailing rate of interest for a note of this type at April 1, 2007 was 15%. The present value of $1 for two periods at 15% is 0.756.

The patent had a carrying value of $40,000 at January 1, 2007, and the amortization for the year ended December 31, 2007 would have been $8,000. The collection of the note receivable from Bell is reasonably assured.

4. On July 1, 2007 Linden sold a parcel of land to Carr Company for $200,000 under an installment sale contract. Carr made a $60,000 cash down payment on July 1, 2007 and signed a four-year, 16% note for the $140,000 balance. The equal annual payments of principal and interest on the note will be $50,000, payable on July 1, 2008 through July 1, 2011. The land could have been sold at an established cash price of $200,000. The cost of the land to Linden was $150,000. Circumstances are such that the collection of the installments on the note is reasonably assured.

Required

1. Prepare the long-term receivables section of Linden’s balance sheet at December 31, 2007.

2. Prepare a schedule showing the current portion of the long-term receivables and accrued interest receivable that would appear in Linden’s balance sheet at December 31, 2007.

3. Prepare a schedule showing interest income from the long-term receivables and gains recognized on sale of assets that would appear on Linden’s income statement for the year ended December 31, 2007.