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On January 1, 2017, Nash Company makes the two following acquisitions. ...

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Accounting

On January 1, 2017, Nash Company makes the two following acquisitions.

1. Purchases land having a fair value of $360,000 by issuing a 5-year, zero-interest-bearing promissory note in the face amount of $606,621.
2. Purchases equipment by issuing a 7%, 8-year promissory note having a maturity value of $560,000 (interest payable annually on January 1).

The company has to pay 11% interest for funds from its bank.

(a) Record the two journal entries that should be recorded by Nash Company for the two purchases on January 1, 2017.
(b)

Record the interest at the end of the first year on both notes using the effective-interest method.image
No. Date Account Titles and Explanation Debit Credit (a) 1. January 1, 2017 TL and 360000 Discount on Notes Payable O 246621 Notes payable 606621 O O 2. January 1, 2017 Land 360000 Discount on Notes payable 246621 Notes payable 606621 (b) 1. December 31, 2017 TTEquipment Discount on Notes payable 2312017 interest Expense . December , DJJ Discount on Notes payable Notes payable

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