12 Exercise 7-15 Noninterest-bearing note receivable L07-77 On June 30, 2018, th

Question

12 Exercise 7-15 Noninterest-bearing note receivable L07-77 On June 30, 2018, the Esquire Company sold some merchandise to a customer for $20,000 and agreed to accept as payment a noninterest-bearing note with an 10% discount rate requiring the payment of $20,000 on March 31, 2019. The 10% rate is appropriate in this situation. Esquire views the financing component of this contract as significant. 20 oints Required 1. Prepare journal entries to record the sale of merchandise i 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? eBook Print Complete this question by entering your answers in the tabs below References Required1Required 2 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. (If no entry is required fora transaction/event, select "No journal entry required" in the first account field.) View transaction list Journal entry worksheet 4 Record the sale of merchandise Note: Enter debits before credits. Date General Journal Debit Credit June 30, 2018

Explanation / Answer

Journa Entry Date Account Tittle Debit Credit 30-Jun Note Receivable ? 20,000 Sale Revenue ? 20,000 Dec-11 Interest Receivable ? 5,000 Interest Reveue ? 5,000 ( $20000*10%*6/12) Mar-31 Cash ? 27,500 Interest Revenue ? 5,000 Interest Receivable ($5000/6*3) ? 2,500 Note Receivable ? 20,000 Efffeective rate of Interest=10%*9/12=7.5%

Related Questions

Navigate

• Browse (All)
• Browse 1
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.