Recording Entries for the Discounting of a Note Receivable

Aerobic Sports Company completed the following 2020 transactions related to a note receivable.

Prepare the journal entries, including any interest earned, that Aerobic Sports Company should make on February 1, 2020, and March 1, 2020.

Note: Round your answers to the nearest whole dollar.

a. February 1, 2020Received a $520,000, 9%, interest-bearing, six-month note from Temple Company for land that had a carrying value of $156,000.

. INILUTY LULU ILIVU T U TU ILIUL LUIS JILI 2 TL 1 1 I 1 1 1 1 1 1 1 1 1 LUULIPULIT Date Account Name Dr. Cr. Feb. 1, 2020 Note Receivable 520,000 Land 156,000 b. March 1, 2020-Discounted the note to Local Bank at a 12% interest rate. Assume the discounting qualifies as a sale. Date Account Name Dr. Cr. March 1, 2020 Interest Receivable 3,900 Interest Revenue 0 3,900 To record interest on note March 1, 2020 Cash 0 0 Loss on Sale of Receivables Interest Receivable 3,900 520,000 Note Receivable To record discounting of note Cash Accounts Receivable Allowance for Doubtful Accounts Interest Receivable Receivable from Factor Note Receivable Discount on Note Receivable Payable to Seller of Receivables Refund Liability Recourse Liability Note Payable Sales Revenue Sales Returns Gain on Sale of Land Sales Discount Sales Discount Forfeited Loss on Sale of Land Financing Revenue Interest Revenue Cost of Goods Sold Bad Debt Expense Finance Expense Interest Expense Loss on Sale of Note Loss on Sale of Receivables N/A