Use the date in P 7 for this problem.

Required

1. Prepare entries in journal form to record the transactions, assuming use of the periodic inventory system. (Use the Review Problem in this chapter as a model).

2. Receiving cash rebates from suppliers based on the past year’s purchases is common in some industries. If at the end of the year, Sarah Company receives rebates in cash from a supplier, should these cash rebates be reported as revenue? Why or why not?