On December 31, 20x0, the Western Corporation sold inventory to Southern Inc. on the following terms: the full value of the inventory of $400,000 is payable on December 31, 20x3 and interest of 3% on the face value of the note ($400,000) is payable each December 31. Westerns incremental borrowing rate is 5% and Southerns incremental borrowing rate is 9%.

Required

Prepare all journal entries relating to the above transaction for the length of the note assuming that Western is: i. a publicly accountable entity, and ii. a private company following ASPE who wants to keep accounting for these types of transactions as simple as possible

I got lost and don't know how to start this when in the information section, they said that there are 2 different incremental borrowing rates.