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 $30,000 on March 31, 2022. The fair value of the merchandise exchanged is $28,200. Esquire views the financing component of this contract as significant.

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), any December 31, 2021 interest accrual, and the March 31, 2022 collection.

2.What is theeffectiveinterest rate on the note?

Required 1

Journal entry 1 = record the sale of merchandise

journal entry 2 = record the interest accrual on December 31

Journal entry 3 = record the interest accrual on March 31

Journal entry 4 = Record the cash collection

Required 2

effective interest rate = ???%