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You are the accountant for Crop Service Inc. (CSI) and your company has entered into the following note receivable arrangement with Green Farms L.td. (GFL)
You are the accountant for Crop Service Inc. (CSI) and your company has entered into the following note receivable arrangement with Green Farms L.td. (GFL) CSI provides GFL cash of $500,000 and in exchange they sign a 5 year promissory note receivable to pay you annual payments of $100,000 plus interest at 12% per year. The cash is provided and the note is signed on June 1, 2018. CSI's year-end is December 31,2018 and no payments were made as of year-end. The first payment of $100,000 plus interest of $12,000 is paid on May 31, 2019. For any interest amounts, use month's instead of exact days. (For example, instead of 31/365 use 1/12) Requirements: 1 Prepare the journal entry needed to issue the note receivable and year-end entries (if necessary). No descriptions are necessary but use a proper heading. Marks Available: 3 2 Prepare the journal entry needed to record the June 1, 2019 loan payment received. Marks Available: 2 5 marks total
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