2. Suppose First Fidelity Bank engaged in the following transactions: 2013 Apr 1 Loaned out $8,000 to Bland, Co. Received a six-month, 10% note. Collected the Bland note at maturity. Oct 1 Dec 1 Loaned $6,000 to Flores, Inc., on a 180-day, 12% note. Dec 31 Accrued interest revenue on the Flores note. 2014 3. May 30 Collected the Flores note at maturity. First Fidelity's accounting period ends on December 31. Requirement Explanations are not needed. Use a 360-day year to compute interest. 1. Journalize the 2013 and 2014 transactions on First Fidelity's books. Decision Case 8-1 Weddings on Demand sells on account and manages its own receivables. Average experience for the past three years has been as follows: Total Sales............ $350,000 Cost of goods sold... 210,000 Bad debt expense 4,000 Other expenses..... 61,000 Unhappy with the amount of bad debt expense she has been experiencing, Aledia Sanchez, owner of Weddings on Demand, is considering a major change in her business. Her plan would gan be to stop selling on account altogether but accept either cash, credit, or debit cards from her customers. Her market research indicates that if she does so, her sales will increase by 10% (ie., from $350,000 to $385,000), of which $200,000 will be credit or debit card sales, and the rest will be cash sales. With a 10% increase in sales, there will also be a 10% increase in Cost of goods sold. If she adopts this plan, she will no longer have bad debt expense, but she will have to pay a fee on debit/credit card transactions of 2% of sales. She also believes this plan will allow her to save $5,000 per year in other operating expenses. Requirement 1. Should Sanchez start accepting debit and credit cards? Show the computations of net income under her present arrangement and under the plan. (Challenge)