Note Transactions at Unrealistic Interest Rates On July 1, 2010, Rantoul Inc. made two sales.

1. It sold land having a fair market value of $900,000 in exchange for a 4-year zero-interest-bearing promissory note in the face amount of $1,416,163. The land is carried on Rantoul’s books at a cost of $590,000.

2. It rendered services in exchange for a 3%, 8-year promissory note having a face value of $400,000 (interest payable annually).

Rantoul Inc. recently had to pay 8% interest for money that it borrowed from British National Bank. The customers in these two transactions have credit ratings that require them to borrow money at 12% interest. Record the two journal entries that should be recorded by Rantoul Inc. for the sales transactions above that took place on July 1, 2010.