Option 3: Purchase the new equipment by giving a non-interest-bearing note with five payments of $120,000 to the supplier (starting on the first day of notes term and each year thereafter) and selling the old equipment for $60,000 cash. The first $120,000 payment would be made in late December 2019. The prevailing interest rate for obligations of this nature is 10%.

Need help with journal entry to record non-interest bearing notes discount