Discounts and returns Non-GST version Ashlea’s Importers sells home decor with credit terms of 2/15, n/30. A trade discount of 25% is given to purchases made by wholesalers. On 3 March 2025, Johnson Wholesalers purchased home decor with a list price of \($218\) 000 from Ashlea’s Importers. The home decor had cost the business \($120\) 000 to import from Bangladesh. Ignore GST.

Required

(a) Determine the amount of the trade discount given to Johnson Wholesalers.

(b) Assume that Johnson Wholesalers returned home decor with an original list price of \($7520,\) and a cost of \($4200.\) What source documents would be used by each business to note the transaction? Prepare journal entries to record the return in the accounting records of both entities.

(c) What is the discount period? If Johnson Wholesalers pays on the last day of the discount period, how much is the sales discount recorded by Ashlea’s Importers? (Don’t forget the return.) Record the journal entry made by both entities.

(d) If Johnson Wholesalers does not pay within the discount period, when is the net amount due? What would be the effective annual interest rate assuming that Johnson Wholesalers pays on the day the net amount is due?