Carr Company sells specialized machinery and equipment. On January 1, 2011, the company sold equipment and received a two-year, $10,000 note with a 3 percent stated interest rate. Interest is payable each December 31, and the entire principal is payable December 31, 2012.
The equipment does not have a readily established market value. The market rate of interest for notes of this type and level of risk is 10 percent.
See Carr Company information above.
Required:
Prepare the entries on Carr Company's books to record the sale of the equipment.
Accounting Principles Board Opinion No. 21, "Interest on Receivables and Payables," requires that the note be accounted for at the market rate of interest appropriate for the transaction. In this case, that rate is 10 percent.

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The Answer of Carr Company sells specialized machinery and equipment. On January 1, 2011, the company sold equipment and received a two-year, $10,000 note with a 3 percent stated interest rate. Interest is payable each December 31, and the entire principal is payable December 31, 2012.
The equipment does not have a readily established market value. The market rate of interest for notes of this type and level of risk is 10 percent.
See Carr Company information above.
Required:
Prepare the entries on Carr Company's books to record the sale of the equipment.
Accounting Principles Board Opinion No. 21, "Interest on Receivables and Payables," requires that the note be accounted for at the market rate of interest appropriate for the transaction. In this case, that rate is 10 percent.

Carr Company Sells Specialized Machinery and Equipment