Airlines Co. sold merchandise to Big University on May 1, 2021, accepting a $870,000, 6-month, noninterest-bearing note with a 17% discount rate in payment for the merchandise.

Which of the following journal entries should Airlines Co. record on May 1st:

Multiple Choice

• Notes receivable	870,000
  Discount on notes receivable		147,900
  Sales revenue		722,100

• Notes receivable	870,000
  Discount on notes receivable		73,950
  Sales revenue		796,050

• Notes receivable	870,000
  Interest revenue		73,950
  Cost of sales		796,050

• Notes receivable	870,000
  Accounts receivable		870,000