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A non interest-bearing note that pays $5,000 three years from today is issued in exchange...

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Question

Accounting

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

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