E4.1 as highlighted

The following transactions are for Unique Artworks Ltd. On 7 December Unique Artworks Ltd sold $792000 of inventory to Cambridge Collectables Ltd, terms 2/7, n/30. The cost of the inventory sold was $528 000. On 8 December Cambridge Collectables Ltd was granted an allowance of $33000 for inventory purchased on 7 December. On 13 December Unique Artworks Ltd received the balance due from Cambridge Collectables Ltd. (a) Prepare the journal entries to record these transactions in the records of Unique Artworks Ltd (b) Assume that Unique Artworks Ltd received the balance due from Cambridge s Ltd on 2 January of the following year instead of 13 December. Prepare the journal entry to record the receipt of payment on 2 January. (c) What are the advantages disadvantages associated with granting a discount for early payment? On 1 July Queens cliff Pty Ltd sold inventory to Stokers Pty Ltd for $20000. The credit terms were 3/10, n/30. Stokers Pty Ltd paid the account promptly on 10 July and uses the perpetual inventory system to record transactions. (a) Record the purchase and payment of inventory in the accounts of Stokers Pty Ltd. (b) Assume Stokers Pty Ltd decided to record the discount as a credit to inventory Record the journal entry (c) What is the difference between the effect on (i) profit and (ii) assets between the treatment of the discount in parts (a) and (b)