Receivables
Problem 1
A customer of J and J purchased $2 million dollars of merchandise on account. J & J Products gives terms of 2%, 10 days, net 30. J& J Products believes that the customer will take the discount if is equal to at least an 16% return. J & J Products uses the net method to record sales. Assume a 360-day year.
Required:
a. How percentage return will be earned by the customer if they make the payment within the discount period?
b. Make the entries on J & J's books assuming the customer pays within the discount period.
c. Make the entries on J & J's books assuming the customer does not pay within the discount period.
d. Make the entries on the customer's books assuming they payed within the discount period.
Make the entries on the customer's books assuming they failed to pay within the discount period.
Problem 5
J &J Products accepts a 5 year, 4 % $40,000 note from a wholly owned subsidiary. The note is for a purchase of inventory from J & J Products.
Required: How would J & J account for the above sale in its consolidated statements?