Judgment Case On January 1, Crefax Corporation purchased a tract of land, for long-term use as a possible future AD\&J 20-110 plant site, in exchange for $50,000 cash plus a five-year note with no interest, even though the current interest for Analyzing Use of Debt similar debt is 15%. The note is to be paid in $20,000 annual amounts; the first $20,000 is due one year from the to Purchase anities date of the land purchase, and the last $20,000 is due at the end of five years. The note also specifies (quite unusu- Asset L03 ally) that instead of being payable in cash, each $20,000 annual amount is to be settled by issuance of 20,000 shares of Crefax common stock, $1 par, to the holder of the note. On the date land was purchased, the fair value of the stock set aside to be issued on the five dates by Crefax Corporation was $180,000. Required a. Prepare and explain the basis for the journal entry that Crefax should make on January 1. b. Prepare and explain the basis for the entry(ies) that Crefax should make on December 31. c. Explain how the following items should be reported on the financial statements of Crefax Corporation: (1) interest expense, (2) land, (3) debt, and (4) paid-in capital