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.
