Nevada Company provided services with a list price of $48,500 to Small Enterprises with terms 2/15, n/45. Nevada records sales at gross.
Required:
1. Prepare the entries to record this sale in Nevada’s journal.
2. Prepare the entry for Nevada’s journal to record receipt of cash in payment for the sale within the discount period.
3. Prepare the entry for Nevada’s journal to record receipt of cash in payment for the sale after the discount period.
4. Assume that Nevada’s customer does not have the available cash to pay Nevada within the discount period. How much interest should the customer be willing to pay for a loan to permit them to take advantage of the discount period (assuming no additional costs to the loan)?