Irving Corporation operates a retail clothing store. On May 1, 2017 Irving purchases a new truck having a list price of $100,000 by making a down payment of $20,000 cash and issuing a zero-interest-bearing note with a face amount of $80,000. The note is due May 1, 2018. Irving would normally have to pay interest at a rate of 12% for such a borrowing, and the dealership has an incremental borrowing rate of 10%.

Instructions: Prepare the necessary entries on May 1 and December 31 assuming the company has a calendar year end and uses the straight-line method of amortization.