Installment Sale

ABC Company sells a building to XYZ on 01/01/2016. The sales price is $500,000. XYZ is to make a $50,000 down payment and pay for the remainder over 10 years. The stated interest rate of 8% is reasonable and the payments must be made quarterly. ABC had paid $475,000 for the building and taken $95,000 in depreciation before the sale.

1. Calculate the quarterly installment payments.

2. Prepare ABCs journal entry to record the sale on 01/01/2016.

3. Prepare XYZs journal entry to record the first quarterly payment on 04/01/2016.

4. Prepare XYZs journal entry to record the second quarterly payment on 07/01/2016.