On March 1, Angela who owns a jewelry store purchased precious stones worth P75,000 from a jewelry wholesaler. Terms: 3/20, n/40. On receiving the goods, Angela checked against the order and found that P5,000 worth of stones were defective. These were returned on April 5 with an accompanying P20,000 check for a partial payment. On April 10, Angela borrowed P50,000 from BPI and issued a 30 day 18% promissory note. She immediately paid the jewelry supplier with the borrowed money. On May 10, a check was issued to BPI for the payment of the note plus interest. REQUIRED: 1. Entries to record the transactions in the books of Angela. 2. Was it a wise decision for Angela to borrow from the bank in order to pay for the stones? Support your answer by comparing the purchase discount and the interest expense.

On March 1, Angela who owns a jewelry store purchased precious stones worth P75,000 from a jewelry wholesaler. Terms: 3/20, n/40. On receiving the goods, Angela checked against the order and found that P5,000 worth of stones were defective. These were returned on April 5 with an accompanying P20,000 check for a partial payment. On April 10, Angela borrowed P50,000 from BPI and issued a 30 day 18% promissory note. She immediately paid the jewelry supplier with the borrowed money. On May 10, a check was issued to BPI for the payment of the note plus interest. REQUIRED: 1. Entries to record the transactions in the books of Angela. 2. Was it a wise decision for Angela to borrow from the bank in order to pay for the stones? Support your answer by comparing the purchase discount and the interest expense.

SWFT Comprehensive Vol 2020

43rd Edition

ISBN:9780357391723

Author:Maloney

Publisher:Maloney

Chapter9: Deduct Ions: Employee And Self-employed - Related Expenses

Section: Chapter Questions

Problem 33P

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