Jamestown Furniture Mart, Inc., sold USD 80,000 of furniture in May to customers who used their American Express credit cards. Such sales are subject to a 3 per cent discount by American Express (a nonbank credit card),

a. Prepare journal entries to record the sales and the subsequent receipt of cash from the credit card company.

b. Do the same as requirement (a), but assume the credit cards used were VISA cards(a bank credit card).

5)Dunwoody Discount Toys, Inc., sells merchandise in a state that has a 5 per cent sales tax. Rather than record sales taxes collected in a separate account, the company records both the sales revenue and the sales taxes in the Sales account. At the end of the first quarter of operations, when it is time to remit the sales taxes to the state taxing agency, the company has USD 420,000 in the Sales account. Determine the correct amount of sales revenue and the amount of sales tax payable.

6Assume the following note appeared in the annual report of a company:

In 2009, two small retail customers filed separate suits against the company alleging misrepresentation, breach of contract, conspiracy to violate federal laws, and state antitrust violations arising out of their purchase of retail grocery stores through the company from a third party. Damages sought range up to USD 10 million in each suit for actual and treble damages and punitive damages of USD 2 million in one suit and USD 10 million in the other. The company is vigorously defending the actions and management believes there will be no adverse financial effect.

What kind of liability is being reported? Why is it classified this way? Do you think it is possible to calculate a dollar amount for this obligation? How much would the company have to pay if it lost the suit and had to pay the full amount?

8)Crawford, Inc., gave a USD 20,000, 120-day, 12 per cent note to Dunston, Inc., in exchange for merchandise. Crawford uses periodic inventory procedure. Prepare journal entries to record the issuance of the note and the entries needed at maturity for both parties, assuming payment is made.

9)Based on the facts in the previous exercise, prepare the entries that Crawford, Inc., and Dunston, Inc., would make at the maturity date, assuming Crawford defaults.

10)John Wood is negotiating a bank loan for his company, Wood, Inc., of USD 16,000 for 90 days. The bank's current interest rate is 10 per cent. Prepare Wood's entries to record the loan under each of the following assumptions:

a. Wood signs a note for USD 16,000. Interest is deducted in calculating the proceeds turned over to him.

b. Wood signs a note for USD 16,000 and receives that amount. Interest is to be paid at maturity.

11)Based on the previous exercise, prepare the entry or entries that would be made at the maturity date for each alternative, assuming the loan is paid before the end of the accounting period.

12)Sally Stillwagon owns a hardware store; she sells items for cash and on account. During 2009, which seemed to be a typical year, some of her company's operating data and other data were as follows:

Sales:
For cash	$1,200,000
On credit	2,200,000
Cost of obtaining credit reports on customers	3,600
Cost incurred in paying a part-time bookkeeper to keep the accounts receivable subsidiary ledger up to date	12,000
Cost associated with preparing and mailing invoices to customers and other collection activities	18,000
Uncollectible accounts expense	45,000
Average outstanding accounts receivable balance (on which Stillwagon estimates she could have earned 10 per cent if it had been invested in other assets)	180,000

A national credit card agency has tried to convince Stillwagon that instead of carrying her own accounts receivable, she should accept only the agency's credit card for sales on credit. The agency would pay her two days after she submits sales charges, deducting 6 per cent from the amount and paying her 94 per cent.

a. Using the data given, prepare an analysis showing whether or not Stillwagon would benefit from switching to the credit card method of selling on credit.

b. What other factors should she take into consideration?

13)Visit the Internet site:http://www.cocacola.com

Locate the most recent annual reports of The Coca-Cola Company. Calculate accounts receivable turnover and the number of days' sales in accounts receivable and prepare a written comment on the results.