Question: Cool Globe Inc. entered into two transactions, as follows: 1. Purchased equipment paying $20,000 down and signed a non interest-bearing note requiring the balance to be paid in four annual installments of $20,000 on the anniversary date of the contract. Based on Cool Globe'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 non interest-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.