Answer:
1. Journal entries to record the sale of merchandise:
Debit Accounts Receivable $30,000
Credit Sales revenue $30,000
Journal entries to record the interest accrual at December 31, 2021:
Debit Interest receivable $900
Credit Interest revenue $900
At March 31, 2022, journal entries to record the collection:
Debit Cash $31,350
Credit Accounts Receivable $30,000
Credit Interest receivable $900
Credit Interest revenue $450
Explanation:
1. Journal entries to record the sale of merchandise:
Debit Accounts Receivable $30,000
Credit Sales revenue $30,000
Esquire agreed to accept a 6% note requiring the payment of interest and principal on March 31, 2022.
The amount of the interest per year = 6% x $30,000 = $1,800
The amount of the interest per month = $1,800/12 = $150
At December 31, 2021, the interest accrual = $150 x 6 = $900
Journal entries to record the interest accrual:
Debit Interest receivable $900
Credit Interest revenue $900
At March 31, 2022, journal entries to record the collection:
Debit Cash $31,350
Credit Accounts Receivable $30,000
Credit Interest receivable $900
Credit Interest revenue $450
