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What entry to record the issue of a note for used equipment

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Reference no: EM132763643

Problem 1: A non interest-bearing note that pays $5,000 three years from today is issued in exchange for used equipment. If the discount rate appropriate for such notes is 8% per annum, the entry to record the issue of a note for the used equipment on our books would include a:

a. Cr Discount on Note Payable $1,031
b. Cr Note Payable $3,969
c. Dr Discount on Note Payable $1,031
d. Dr Used Equipment $5,000
e. None of the other alternatives are correct

Reference no: EM132763643

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