Exercise 7-20 (Algo) Noninterest-bearing notes receivable [LO7-7] On June 30, 2024, the Esquire Company sold merchandise to a customer and accepted a noninterest-bearing note in exchange. The note requires payment of $47,000 on March 31, 2025. The fair value of the merchandise exchanged is $44,180. Esquire views the financing component of this contract as significant. Required: 1. Prepare journal entries to record the sale of merchandise (omit any entry that might be required for the cost of the goods sold), any December 31, 2024 interest accrual, and the March 31, 2025 collection. 2. What is the effective interest rate on the note?

Exercise 7-20 (Algo) Noninterest-bearing notes receivable [LO7-7] On June 30, 2024, the Esquire Company sold merchandise to a customer and accepted a noninterest-bearing note in exchange. The note requires payment of $47,000 on March 31, 2025. The fair value of the merchandise exchanged is $44,180. Esquire views the financing component of this contract as significant. Required: 1. Prepare journal entries to record the sale of merchandise (omit any entry that might be required for the cost of the goods sold), any December 31, 2024 interest accrual, and the March 31, 2025 collection. 2. What is the effective interest rate on the note?

FINANCIAL ACCOUNTING

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ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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Exercise 7-20 (Algo) Noninterest-bearing notes receivable [LO7-7]
On June 30, 2024, the Esquire Company sold merchandise to a customer and accepted a noninterest-bearing note in exchange. The
note requires payment of $47,000 on March 31, 2025. The fair value of the merchandise exchanged is $44,180. Esquire views the
financing component of this contract as significant.
Required:
1. Prepare journal entries to record the sale of merchandise (omit any entry that might be required for the cost of the goods sold),
any December 31, 2024 interest accrual, and the March 31, 2025 collection.
2. What is the effective interest rate on the note?

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