Michigan Automotive Inc. purchased a new state-of the art equipment on January 1, 2017 from Masco Manufacturing by signing an 8% five-year promissory note with a maturity value of $1,000,000. Interest is payable annually. However, the market interest rate for notes of this type with similar risk characteristics is 10%. Fiscal year end is December 31. (Use effective interest method).

Record a journal entry for purchase of equipment by issuing a long-term note on January 1, 2017 and a journal entry for record a journal entry for interest payment and interest expense as of December 31, 2017

PLEASE RECORD BOTH JOURNAL ENTRIES!