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On March 1, Angela who owns a jewelry store purchased precious stones worth P75,000 from a jewelry wholesaler. Terms: 3/20, n/40. On receiving the goods,

On March 1, Angela who owns a jewelry store purchased precious stones worth P75,000 from a jewelry wholesaler. Terms: 3/20, n/40. On receiving the goods, Angela checked against the order and found that P5,000 worth of stones were defective. These were returned on April 5 with an accompanying P20,000 check for a partial payment. On April 10, Angela borrowed P50,000 from BPI and issued a 30 day 18% promissory note. She immediately paid the jewelry supplier with the borrowed money. On May 10, a check was issued to BPI for the payment of the note plus interest.

REQUIRED:

1. Entries to record the transactions in the books of Angela.

2. Was it a wise decision for Angela to borrow from the bank in order to pay for the stones? Support your answer by comparing the purchase discount and the interest expense.

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