On June 30, 2018, the Esquire Company sold some merchandise to a customer for $30,000 and agreed toaccept as payment a noninterest-bearing note with an 8% discount rate requiring the payment of $30,000 on March31, 2019. The 8% rate is appropriate in this situation. Esquire views the financing component of this contract assignificant.Required:1. Prepare journal entries to record the sale of merchandise (omit any entry that might be required for the costof the goods sold), the December 31, 2018 interest accrual, and the March 31, 2019 collection.2. What is the effective interest rate on the note?
On June 30, 2018, the Esquire Company sold some merchandise to a customer for $30,000 and agreed toaccept as payment a noninterest-bearing note with an 8% discount rate requiring the payment of $30,000 on March31, 2019. The 8% rate is appropriate in this situation. Esquire views the financing component of this contract assignificant.Required:1. Prepare journal entries to record the sale of merchandise (omit any entry that might be required for the costof the goods sold), the December 31, 2018 interest accrual, and the March 31, 2019 collection.2. What is the effective interest rate on the note?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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On June 30, 2018, the Esquire Company sold some merchandise to a customer for $30,000 and agreed to
accept as payment a noninterest-bearing note with an 8% discount rate requiring the payment of $30,000 on March
31, 2019. The 8% rate is appropriate in this situation. Esquire views the financing component of this contract as
significant.
Required:
1. Prepare
of the goods sold), the December 31, 2018 interest accrual, and the March 31, 2019 collection.
2. What is the effective interest rate on the note?
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