Problem 7-9 (Part Level Submission)

Vaughn Inc. had the following long-term receivable account balances at December 31, 2016.

Note receivable from sale of division$900,000Note receivable from officer416,000

Transactions during 2017 and other information relating to Vaughn's long-term receivables were as follows.

1.The $900,000note receivable is dated May 1, 2016, bears interest at9%, and represents the balance of the consideration received from the sale of Vaughn's electronics division to New York Company. Principal payments of $300,000plus appropriate interest are due on May 1, 2017, 2018, and 2019. The first principal and interest payment was made on May 1, 2017. Collection of the note installments is reasonably assured.2.The $416,000note receivable is dated December 31, 2016, bears interest at8%, and is due on December 31, 2019. The note is due from Sean May, president of Vaughn Inc. and is collateralized by10,400shares of Vaughn's common stock. Interest is payable annually on December 31, and all interest payments were paid on their due dates through December 31, 2017. The quoted market price of Vaughn's common stock was $46per share on December 31, 2017.3.On April 1, 2017, Vaughn sold a patent to Pennsylvania Company in exchange for a $102,000zero-interest-bearing note due on April 1, 2019. 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 at April 1, 2017, was14%. The present value of $1 for two periods at14% is0.769(use this factor). The patent had a carrying value of $40,800at January 1, 2017, and the amortization for the year ended December 31, 2017, would have been $8,160. The collection of the note receivable from Pennsylvania is reasonably assured.4.On July 1, 2017, Vaughn sold a parcel of land to Splinter Company for $191,700under an installment sale contract. Splinter made a $57,510cash down payment on July 1, 2017, and signed a4-year13% note for the $134,190balance. The equal annual payments of principal and interest on the note will be $48,937payable on July 1, 2018, through July 1, 2021. The land could have been sold at an established cash price of $191,700. The cost of the land to Vaughn was $141,700. Circumstances are such that the collection of the installments on the note is reasonably assured.

(a)

Make the long-term receivables section of Vaughn's balance sheet at December 31, 2017