On June 30, 2011, 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, 2012 The 8 rate is appropriate in this situation Required 1 Prepare journal entries ...

Requirement 1 June 30 2011 Note receivable face amo ...

On June 30, 2011, the Esquire Company sold some merchandise to a customer for $30,000 and agreed

Question:

On June 30, 2011, 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% requiring the payment of $30,000 on March 31, 2012. 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, 2011 interest accrual, and the March 31, 2012 collection.
2. What is the effective interest rate on the note?

Discount Rate
Depending upon the context, the discount rate has two different definitions and usages. First, the discount rate refers to the interest rate charged to the commercial banks and other financial institutions for the loans they take from the Federal...