Chapter 07 - In-Class Exercises_1

Chapter 07 - In-Class Exercises_1 - Chapter # 7 In-Class...

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Chapter # 7 In-Class Exercises Page 1 of 6 Chapter 07 - In-Class Exercises.docx - 06/10/08) Exercise #1 On January 6, 2006, Ajax Corporation sold merchandise having a sale price of $42,000 to Comet Company with the terms 2/10, n/60. On January 15, 2006, Ajax received a check from Comet in the amount of $19,600 in partial payment for the merchandise. Ajax received the balance due from Comet on March 7, 2006. Required: (a) Prepare the journal entries for the purchase and payments based on the gross method. (b) Prepare the journal entries for the purchase and payments based on the net method. (c) What effective annual interest rate did Comet pay on the balance paid on March 7 th because it didn’t take advantage of the cash discount (assume a 360 day year). Exercise #2 Before any year-end adjustments, the balance in Ajax Corporation’s Receivable account was $498,000 and the Allowance for Bad Debt Accounts had a credit balance of $15,000. Credit sales for the year have been $4,800,000. The following aging
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Chapter 07 - In-Class Exercises_1 - Chapter # 7 In-Class...

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