On June 30, 2021, the Esquire Company sold merchandise to a customer and accepted a noninterest-bearing note in exchange. The note requires payment of $43,000 on March 31, 2022. The fair value of the merchandise exchanged is $41,710. Esquire views the financing component of this contract as significant. Required:

1. Prepare a journal entry to record the sale of merchandise (omit any entry that might be required for the cost of the goods sold).

Prepare a journal entry for the December 31, 2021 interest accrual.

Prepare a journal entry for the March 31, 2022 collection.

2. What is the effective interest rate on the note (%)?