On December 1, 2016, Lynch Incorporated sold $18,000 of merchandise with terms 2/10, n/EOM. On December 11,

Question:

On December 1, 2016, Lynch Incorporated sold $18,000 of merchandise with terms 2/10, n/EOM. On December 11, 2016, collections were made on sales originally billed for $12,000, and on December 31, 2016, additional collections on sales originally billed for $5,000 were received.
Required:
1. Prepare the journal entries to record the sale, collections, and any required year-end adjustments assuming that Lynch records and sales at
(a) The gross price and
(b) The net price.
2. Assume that Lynch’s customer does not have the available cash to pay Lynch within the discount period. How much interest should the customer be willing to pay for a ban to permit them to take advantage of the discount period (assume no additional costs to the loan)?
3. Explain why Lynch’s granting of cash (sales) discounts may improve cash flow. Accounts Receivable
Accounts receivables are debts owed to your company, usually from sales on credit. Accounts receivable is business asset, the sum of the money owed to you by customers who haven’t paid.The standard procedure in business-to-business sales is that...