Exercise 1. Problem Solving (60 points) On January 10 Ocean plc. sold to River Itd. a product having a sales price of $15,000 with terms of 3/10, n/60. On January 12, Ocean plc received a cash payment for the balance due from River Itd. Instructions: Prepare journal entries on the Shine plc. books to record sales and receivables for all the events noted above under "Sales and receivables are entered at gross selling price" base. (record January 10 and January 12 transactions) Exercise 2 American College of the Midd 20 points 20 Choose only one correct Answer 1. Which of the following is not considered cash for financial reporting purposes? a. Petty cash funds and change funds b. Money orders, certified checks, and personal checks c. Coin, currency, and available funds d. Postdated checks and I.O.U.'s 2. When a customer purchases merchandise inventory from a business organization, she may be given a discount which is designed to induce prompt payment. Such a discount is called a(n) a. trade discount. b. nominal discount. c. enhancement discount. d. cash discount. 3. Why is the allowance method preferred over the direct write-off method of accounting for bad debts? a. Allowance method is used for tax purposes b. Estimates are used c. Determining worthless accounts under direct write-off method is difficult to do d. Improved matching of bad debt expense with revenue State if the statement below is True or False 1. Cash equivalents are investments with original maturities of six months or less. Exercise 3 (20 points) a. Provide a Definition for "cash" as an accounting term b. What may be included under the heading of "cash"? Give at least 4 examples. Bonus question (10 points) Novel Company has the following items at year-end: the Middle East, 2020 Cash in bank 40,000 Petty cash 980 Commercial paper with maturity of 2 months 4,680 Postdated checks 2,700 What amount should Novel report as cash and cash equivalents? Show your calculations