Question

On June 30, 2016, 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, 2017. The 8% rate is appropriate in this situation. 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, 2016 interest accrual, and the March 31, 2017 collection. (If no entry is required for a transaction/event, select "No journal entry required" in the first account field.)

Answer 1

Date	General Journal		Debit ($)	Credit ($)
June 30, 2016	Note receivable		30,000
		Discount on note receivable ($30,000 × 8% × 9/12)		1,800
		Sales revenue		28,200
	(Merchandise sold and accepted note)
Dec 31,2016	Discount on note receivable (1,800/9)*6)		1,200
		Interest revenue		1,200
	(Discount amortized)
Mar 31,2017	Discount on note receivable (1,800/9)*3)		600
		Interest revenue		600
	(Discount amortized)
Mar 31,2017	Cash		30,000
		Note receivable		30,000
	(Notes amount received)