Recording Entries for Note Payable Exchanged for Cash and Noncash Consideration

On January 1, Allen Corp. issued a 3-year, zero-interest-bearing note payable for $13,000 to Town Corp. for a cash receipt of $13,000. In lieu of interest payments, Allen Corp. agreed to sell merchandise to Town Corp. at a discount and provide free shipping during the 3-year period. The market rate for this note is 8%. Record the journal entry for Allen Corp. on January 1 for issuance of the note payable.