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E7-13 (2.04) (Note Transactions at Unreallitic Interest Rates) On July 1,2017, Agincourt Inc, made two sales. 1. It sold land having a fair value of 5700,000 in exchange for a 4 -year zero-interest-bearing promissory note in the face amount of $1,101,460. The land is carried on Agincourt's books at a cost of $590,000. 2. It rendered services in exchunge for a 3%,8-year promissory note having a face value of $400,000 (interest payable annually). Agincourt Inc, recently had to pay 8% interest for money that it borrowed from British National Bank. The customers in these two transactions have credit ratings that require them to borrow money at 12% interest. Instructions Record the two joumal entries that should be meorded by Agincourt Inc for the sales transactions above that took place on July 1,2017. E7-14 (L04, 6) (Notes Recelvable with Unrealistic Interest Rate) On December 31, 2015, Ed Abbey Co, performed envitonmental consulting services for Hayduke Co. Hayduke was short of cash, and Abbey Co. agreed to accept a $200,000 zero-interest-bearing note due December 31, 2017, as payment in full. Hayduke is somewhat of a credit risk and typically borrows funds at a rate of 10%. Abbey is much mone creditworthy and has various lines of credit at 6%. Instructions (a) Prepare the journal entry to recond the transaction of December 31, 2015, for the Ed Abbey Ca. (b) Assuming Ed Abbey Co.'s fiscal yearend is December 31, prepare the joumal entry for December 31, 2016. (c) Assuming Ed Abbey Co's fiscal year-end is December 31, prepane the joumal entry for December 31, 2017

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