On January 1, 2009, Boston Ltd., made the following acquisitions:

1. Purchased machinery having a fair market value of $400,000 by issuing a four-year, non-interest-bearing promissory note in the face amount of $544,196. (Hint you need to figure out the interest rate).
2. Purchased heavy equipment by issuing a nine-year, 6% promissory note having a maturity value of $325,000(interest of 6% is paid annually at December 31). The company has to pay 10% interest for funds from its bank.

Required:

1. Record Bostons journal entries on January 1, 2009, for each of the purchases.
2. Record the interest at the end of the first year on both notes using the effective interest method.