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(Appendix 5A) Sales Discounts

Cocoa Company regularly provides services to Yankee Supply with terms 2/15, n/30 and records sales at gross. During a recent month, the two firms engaged in the following transactions:

Cocoa provided services with a list price of $33,500.

Cocoa provided services with a list price of $48,000.

Yankee paid for the purchase in Transaction a within the discount period.

Yankee paid for the purchase in Transaction b after the discount period.

Required:

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1. Prepare the journal entries for Cocoa to record the sales in Transactions a and b (make separate entries). If an amount box does not require an entry, leave it blank.

a.	Accounts PayableAccounts ReceivableCashSales DiscountsSales Revenue	- Select -	- Select -
	Accounts PayableAccounts ReceivableCashSales DiscountsSales Revenue	- Select -	- Select -
b.	Accounts PayableAccounts ReceivableCashSales Returns and AllowancesSales Revenue	- Select -	- Select -
	Accounts PayableAccounts ReceivableSales DiscountsSales RevenueUnearned Sales Revenue	- Select -	- Select -

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2. Prepare the journal entry to record the receipt of Yankees payment in Transaction c. If an amount box does not require an entry, leave it blank.

c.	Accounts PayableAccounts ReceivableCashSales Returns and AllowancesSales Revenue	- Select -	- Select -
	Accounts ReceivableAllowance for Doubtful AccountsSales RevenueSales Returns and AllowancesUnearned Sales Revenue	- Select -	- Select -
	Accounts PayableAccounts ReceivableNotes PayableSales Returns and AllowancesSales Revenue	- Select -	- Select -

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3. Prepare the journal entry to record the receipt of Yankees payment in Transaction d. If an amount box does not require an entry, leave it blank.

d.	Accounts PayableAccounts ReceivableCashNotes PayableNotes Receivable	- Select -	- Select -
	Accounts PayableAccounts ReceivableCashSales DiscountsSales Revenue	- Select -	- Select -

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4. Conceptual Connection: What implied annual interest rate is Yankee incurring by failing to take the sales discount and, instead, paying the gross amount after 30 days? Assume a 365 day year. Round your answer to one decimal place. fill in the blank 7c995efd1001010_1 %