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Discuss entries to record the amortization of the discount

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Zobell Corporation sells equipment with a book value of $8,000 receiving a non-interest-bearing note due in the years with a face amount of $10,000. There is no established market value for the equipment. The interest rate on similar obligations is estimated at 12%. Compute the gain or loss on the sale and the discount on notes receivable and make the necessary entry to record the sale. Also make the entries to record the amortization of the discount at the end of the first second and third year using effective interest amortization. (Round to the nearest dollar.)

Reference no: EM131796407

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