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:

None of the other alternatives are correct

Cr Discount on Note Payable $1,031

Dr Discount on Note Payable $1,031

Dr Used Equipment $5,000

Cr Note Payable $3,969