Question

On June 30, 2018, the Esquire Company sold some merchandise to a customer and agreed to accept as payment a noninterest-bearing note with an 8% discount rate requiring the payment of $30,000 on March 31, 2019. The 8% rate is appropriate in this situation. Prepare journal entries to record the sale of merchandise (omit any entry that might be required for the cost of goods sold), the January 31, 2018 interest accrual, and the March 31, 2019 collection

Answer 1

The journal entries to be booked will be:

Date	Description	Debit ($)	Credit ($)	Workings
Jun-30 2018	Notes Receivables	30,000		given
	Sales Revenue		28,200	30000-1800
	Discount on Notes Receivables		1,800	30000*8%*9/12
Dec-31 2018	Discount on Notes Receivables	1,200		1800*6/9
	Interest Revenue		1,200
Mar-31 2019	Discount on Notes Receivables	600		1800*3/9
	Cash	30000
	Interest Revenue		600
	Notes Receivables		30000

The date is mentioned as Jan 31, 2018. It should either be Dec 31, 2018 or Jan 31 2019. The journal entries above are made for Dec 31, 2018.

Please comment in case of any issue and I will be happy to rectify it.