Question

On June 30, 2018, the Esquire Company sold some merchandise to a customer for $47,000 and agreed to accept as payment a noninterest-bearing note with an 8% discount rate requiring the payment of $47,000 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?

Complete this question by entering your answers in the tabs below.

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 for a transaction/event, select "No journal entry required" in the first account field.)

Date	General Journal	Debt	Credit
Jun 30, 2018
December 31, 2018
March 31, 2019
March 31, 2019

What is the effective interest rate on the note? (Round your intermediate calculations and the final percentage answer to 3 decimal places.)

Effectie interest rate

%

Answer 1