Cost Recovery Method - After a two-year search for a buyer, Hobson, Inc. sold its idle plant facility to Jackson Company for $700,000 on January 1, 2005. On this date the plant had a depreciated cost on Hobson’s books of $500,000. Under the agreement Jackson paid $100,000 cash on January 1, 2005, and signed a $600,000 note bearing interest at 10%. The note was payable in installments of $100,000, $200,000, and $300,000 on January 1, 2006, 2007, and 2008, respectively. The note was secured by a mortgage on the property sold. Hobson appropriately accounted for the sale under the cost recovery method since there was no reasonable basis for estimating the degree of collectibility of the note receivable. Jackson repaid the note with three late installment payments, which were accepted by Hobson, as follows:

Date of Payment	Principal	Interest
1-Jul-06	$100,000	$90,000
31-Dec-07	200,000	75,000
1-Feb-09	300,000	32,500

Required

Prepare a schedule (using the following format) to record the initial transaction for the sale of the idle plant facility, the application of subsequent cash collections on the note, and the necessary journal entry on the date the transaction is complete.

Date	Cash Received Debit	Note Receivable Dr. (Cr.)	Idle Plant (Net) (Credit)	Deferred Income Dr. (Cr.)	Income Recognized (Credit)
Jan. 1, 2005	$100,000
1-Jul-06	190,000
Dec. 31, 2007	275,000
Feb. 1, 2009	332,500
Feb. 1, 2009