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On June 30 2018 the Esquire Company sold some merchandise to a customer for $3000 and agreed to accept as payment a non interest-bearing note with

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 journal entries to record the sale of merchandise (omit any entry that might be required for the cost 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?

Apr 21 2020 View more View Less

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