Final answer:
The question pertains to making a journal entry for the sale of nonpublic company stock in exchange for a noninterest-bearing note, which requires calculating the Present Discounted Value using a discount rate of 8%. The entry involves debiting 'Notes Receivable' and crediting 'Stock' and possibly 'Gain on Sale of Stock'.
Step-by-step explanation:
The student's question involves creating a journal entry for the sale of stock in a nonpublic company, in exchange for a noninterest-bearing note. Given that the note has a face value of $6,000 due on February 28, 2019, and the transaction was executed with an 8% discount rate, the Present Discounted Value (PDV) must be calculated to recognize the sale accurately. To calculate the PDV, one would use the formula to discount the future payment of $6,000 by the 8% discount rate to determine how much should be recorded as the receivable today. However, since the student question lacks the transaction date needed for an exact calculation, we will outline the steps for how to move forward when all data is present.
The journal entry would typically debit 'Notes Receivable' for the present value of the note, credit 'Stock' for the book value of the stock, and credit 'Gain on Sale of Stock' for the difference, if any, between the present value of the note and the book value of the stock.