On December 12, Woodington sold goods on account for a gross price of $40,000. The terms of the sale were 2/10, n/30. As of December 31, when financial statements were prepared, no payment had been received by Woodington. Full payment was received on January 5 of the following year.

(a) Prepare journal entries for these transaction.

(b) Assume that full payment was received on December 20. Prepare journal entries and discuss how the timing of the cash receipt affected the income statement and statement of cash flows.