Caren Company sells specialized machinery and equipment. On January 1, 2008, the company sold equipment and received a two-year, $10,000 note with a 3 percent stated interest rate. Interest is payable each December 31, and the entire principal is payable December 31, 2009.
The equipment does not have a readily established market value. The market rate of interest for notes of this type and level of risk is 10 percent.
Required
Prepare the entries on Caren Company’s books to record the sale of the equipment.
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