Concept explainers
Air Compressors Inc. purchases compressor parts for its inventory from a supplier. The following transactions take place during the current year:
A. On April 5, the company purchases 400 parts for $8.30 per part, on credit. Terms of the purchase are 4/ 10, n/30, invoice dated April 5.
B. On May 5, Air Compressors does not pay the amount due and renegotiates with the supplier. The supplier agrees to $400 cash immediately as partial payment on note payable due, converting the debt owed into a short-term note, with a 7% annual interest rate, payable in three months from May 5.
C. On August 5, Air Compressors pays its account in full.
Record the
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