Problem 2 (Round all calculations to the nearest whole dollar. NO CENTS!!!)

On January 2, 2016, Jays Junkets had the following transactions. The interest rate charged on notes of this type is 9%.

1. Sold land in exchange for a $ 675,000 zero-interest bearing note due December 31, 2021. The land was originally purchased in 2013 for $ 390,000. It currently has a tax-assessed value of $ 365,000. a. Prepare the 01/02/16 journal entry. b. What account(s) and amount(s) would be reported on a 2016 year-end income statement? (THINK!) c. What account(s) and amount(s) would be reported on a 2016 post-closing trial balance for the note?

2. Sold inventory and accepted a 7% 5-year promissory note having a maturity value of $ 325,000. Interest is payable annually on December 31st. The item sold originally cost Jay $ 155,000. a. Prepare the 01/02/16 journal entry/entries. (THINK!) b. Prepare the 12/31/16 journal entry. c. Is the entry in (b) a year-end adjusting entry? Why are why not? d. What account(s) and amount(s) would be reported on a 2016 year-end income statement? e. Give the 2016 balance sheet presentation of the note.