Question

please complete both required parts to the question

Exercise 7-18 (Algo) Notes receivable [LO7-7] On June 30, 2021, the Esquire Company sold some merchandise to a customer for $46.000. In payment, Esquire agreed to accept a 8% note requiring the payment of interest and principal on March 31, 2022. 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, 2021 interest accrual, and the March 31, 2022 collection. (Do not round intermediate calculations.) 2. If the December 31 adjusting entry for the interest accrual is not prepared, by how much will income before income taxes be over-or understated in 2021 and 2022? 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), the 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.) View transaction list Journal entry worksheet < 1 2 3 Record the sale of merchandise.

Answer 1

(1)

Date	General Journal	Debit	Credit
June 30, 2021	Note receivable	$46000
	Sales revenue		$46000
Dec 31, 2021	Interest receivable ($46000 * 8% * 6/12)	$1840
	Interest revenue		$1840
March 31, 2022	Cash	$48760
	Interest revenue ($46000 * 8% * 3/12)		$920
	Interest receivable		$1840
	Note receivable		$46000

(2)

2021 income before income taxes would be	understated	by	$1840
2022 income before income taxes would be	overstated	by	$1840