Question

please complete both required parts to the problem

Exercise 7-19 (Algo) Noninterest-bearing note receivable (L07-7) On June 30, 2021, the Esquire Company sold merchandise to a customer and accepted a noninterest-bearing note in exchange. The note requires payment of $52,000 on March 31, 2022. The fair value of the merchandise exchanged is $50,050. 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, 2021 interest accrual, and the March 31, 2022 collection 2. What is the effective interest rate on the note? Complete this question by entering your answers in the tabs below. Required 1 Required 2 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, 2021 interest accrual, and the March 31, 2022 collection. (If no entry is required for a transaction/event, select "No journal entry required in the first account field. Do not round Intermediate calculations.) View transaction list Journal entry worksheet 1 2 3 4 Record the sale of merchandise < Prey 18 of 18 !!! Next >

Answer 1

(1)

Date	General Journal	Debit	Credit
June 30, 2021	Note receivable	$52000
	Discount on note receivable		$1950
	Sales revenue		$50050
Dec 31, 2021	Discount on note receivable ($1950/9 * 6)	$1300
	Interest revenue		$1300
March 31, 2022	Discount on note receivable ($1950/9 * 3)	$650
	Interest revenue		$650
March 31, 2022	Cash	$52000
	Note receivable		$52000

(2) Effective rate of interest = $1950 = $50050 * R * 9/12

• $1950 / $50050 = R * 9/12
• R = ($1950 / $50050) * (12/9) = 5.195%