Question - Jenks entered into two transactions, as follows:
1. Purchased equipment paying $25,000 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 Jenks 12% borrowing rate for such transactions, the implicit interest cost is $18,253.
2. Purchased a tract of land in exchange for $8,000 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 $48,000.
Required: Prepare the journal entries for these transactions.