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:

Multiple Choice

• Dr Used Equipment $5,000

• Cr Discount on Note Payable $1,031

• Cr Note Payable $3,969

• None of the other alternatives are correct

• Dr Discount on Note Payable $1,031