On January 1, 2017, Sheffield Company makes the two following acquisitions. 1. Purchases land having a...

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Accounting

On January 1, 2017, Sheffield Company makes the two followingacquisitions. 1. Purchases land having a fair value of $150,000 byissuing a 5-year, zero-interest-bearing promissory note in the faceamount of $252,759. 2. Purchases equipment by issuing a 6%, 9-yearpromissory note having a maturity value of $180,000 (interestpayable annually on January
1). The company has to pay 11% interest for funds from itsbank.
(a) Record the two journal entries that should be recorded bySheffield Company for the two purchases on January 1, 2017.
(b) Record the interest at the end of the first year on bothnotes using the effective-interest method.

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No Date Account titles and explanation Debit Credit a 1 Jan 1 2017 Land 150000 Discount on notes payable 252759150000 102759 Note payable 252759 To record land purchased 2 Jan 1 See Answer

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