Prepare the journal entries for these transactions

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Reference no: EM13122740

Cool Globe Inc. entered into two transactions, as follows:

1. Purchased equipment paying $20,000 down and signed a noninterest-bearing note requiring the balance to be paid in four annual installments of $20,000 on the anniversary date of the contract. Based on Bright Light's 12% borrowing rate for such transactions, the implicit interest cost is $19,253.
2. Purchased a tract of land in exchange for $10,000 cash down payment and a noninterest-bearing note requiring five $10,000 annual payments, with the first annual payment in one year. The fair value of the land is $46,000.

Required:
Prepare the journal entries for these transactions.

Reference no: EM13122740

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