The income before income taxes is 2024 understated by $1,890 and 2025 overstated by $1,890.
<h3>Income before taxes</h3>
Esquire Company journal entries
June 30, 2024
Debit Note receivable $54,000
Credit Sales $54,000
Dec 31, 2024
Debit Interest receivable $1,890
Credit Interest Income $1,890
($54,000 x 7% x6/12)
March 31, 2025
Debit Cash $56,835
Credit Interest receivable $1,890
Credit Interest income $945
($54000 x 7% x 3/12 )
Credit Note Receivable $54,000
Therefore the income before income taxes is 2024 understated by $1,890 and 2025 overstated by $1,890.
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