A piece of equipment that originally cost $70,000 was sold for $50,000 at a gain of $1000. A new piece of equipment was purchased to replace the one that was sold. It cost $100,000. A note was given for $80,000 and the balance of the equipment was paid for with cash. This transaction took place on 1-2-07. The interest rate on the note for $80,000 is 8%. It is due 1-2-09. No interest has yet been recorded for this note. Use even months-not days-to calculate interest expense.

My answer is
Debit
Equipment 100,000
Note Payable 80,000
Credit
Cash 180,000

Here is the way I see it.
1. There are no entries to remove the old equipment off the books.
2. The entry you made records the purchase of the equipment, but you have reduced your cash $180.000. If the equipment cost 100,000 and you financed 80,000 then you are only out cash of 20,000, Your entry needs to be reworked.
3. You need an adjustment to record the accrued interest.