Reference no: EM13949432

On June 3 , Arnold Limited sold to Chester Arthur merchandise having a sale price $ 3000 with term 3/10, n/60, f.o.b. shipping point. A $90 invoice, term n/30, was received by Chester on June 8 from John Booth Transport Service for the freight cost . When it received the goods on June 5, Chester notified Arnold that $500 of the merchandise contained flaws that rendered it worthless; the same day Arnold limited issued a credit memo covering the worthless merchandise and asked that it be returned to them at their expense. The freight on the returned merchandise was $25, which Arnold paid on June 7. On June 12, the company received a cheque for the balance due from Chester Arthur.

a) Prepare journal entries on Arnold Limited's books assuming that:

1. Sales and receivable are entered at a gross selling price.

2. Sale sand receivables are entered net of cash discounts.

b) prepare journal entry under assumption 2, if Chester Arthur did not pay until July 29.

c) From Chester Arthur's perspective, calculate the implied annual interest rate on accounts receivable not paid to Arnold within the discount period. Chester Arthur has a line of credit facility with its bank at 10% I got the answer a and b already. But not the c part. please send me the c part answer of the question as early as possible. Am waiting for the positive reply.