On December 1 2016 Lynch Incorporated sold 18 000 of

merchandise #2461
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 accounts receivable 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.View Solution:
On December 1 2016 Lynch Incorporated sold 18 000 of merchandise

ANSWER
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