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Cash DiscountsPrianka Porter manages Studio Sound, an audio components specialty shop.Prianka is negotiating a $25000...

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Accounting

Cash DiscountsPrianka Porter manages Studio Sound, an audio components specialty shop.Prianka is negotiating a $25000 order from one of the shop's main suppliers, Audiotronic Suppliers. The supplier has offered a 3 percent discount if payment is made within 15 days. Studio Sound does not have enough cash on hand to take advantage of the discount.Studio Sound has a good relationship with its bank. Prianka can obtain a30-day loan at an annual rate of 10 percent. Prianka is certain that within 30 days, there will be enough cash on hand to repay the bank plus interest.Questions1. How much is the discount on the purchase?2. How much is the interest expense on the 30-day loan?3. Would you recommend that the loan be made and the discount taken?4. Prepare the journal entry to record the purchase from Audiotronic Suppliers.5. Prepare the journal entry to record the bank loan.6. Prepare the journal entry to record the payment to Audiotronic Suppliers.7. Prepare the journal entry to repay the bank.

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