On January 1, 2020, Vaughn Company makes the two following acquisitions.

1.		Purchases land having a fair value of $220,000 by issuing a 4-year, zero-interest-bearing promissory note in the face amount of $333,975.
2.		Purchases equipment by issuing a 6%, 9-year promissory note having a maturity value of $280,000 (interest payable annually).

The company has to pay 11% interest for funds from its bank.

(a)		Record the two journal entries that should be recorded by Vaughn Company for the two purchases on January 1, 2020.
(b)		Record the interest at the end of the first year on both notes using the effective-interest method.

No. Date Account Titles and Explanation Debit Credit (a) 1. January 1, 2020 Land 220000 Discount on Notes Payable 113975 Notes Payable C 333975 333975 Notes Payable Equipment D 02474 2. January 1, 2020 1, 2020 C 2 202474 Discount on Notes Payable 77526 Notes Payable 280000 (b) 1. December 31, 2020 Interest Expense 24200 Discount on Notes Payable 24200 2. December 31, 2020 Interest Expense 22272 Discount on Notes Payable 5472 Notes Payable 16800