Presented below are two independent situations:

$($a$)$ On January $1,2022,$ Vaughn Inc. purchased land that had an assessed value of $$322,000$ at the time of purchase. A $$517,000,$ zerointerest$-$bearing note due January $1,2025,$ was given in exchange. There was no established exchange price for the land, nor a ready market price for the note. The interest rate charged on a note of this type is $12\%.$

Determine at what amount the land should be recorded at January $1,2022,$ and the interest expense to be reported in $2022$ related to this transaction. $($Round answers to $0$ decimal places, e$.$g$.38,548.)$

Land to be recorded at January $1,2022,$$ $$

Interest expense to be reported

$

$$

$($b$)$ On January $1,2022,$ Bramble Furniture Co$.$ borrowed $$6,100,000($face value$)$ from Aurora Co$.,$ a major customer, through a zerointerest$-$bearing note due in $4$ years. Because the note was zero$-$interest$-$bearing, Bramble Furniture agreed to sell furniture to this customer at lower than market price. A $10\%$ rate of interest is normally charged on this type of loan.

Prepare the journal entry to record this transaction. $($Round present value factor calculations to $5$ decimal places, e$.$g$.1\mathrm{.}25124$ and final answers to $0$ decimal places, e$.$g$.38,548.$ If no entry is required, select $"$No Entry" for the account titles and enter $0$ for the amounts. Credit account titles are automatically indented when amount is entered. Do not indent manually.$)$

Account Titles and Explanation

Debit

Credit