Question

On December 1, 2019, Lynch, Inc. sold merchandise on account with a list price of $20,000 and trades discounts of 30% and 5%. Terms are 2/10, n/30. On December 11, 2019, 40% of the receivables were collected. On December 31, 2019, the remaining 60% of the receivables were collected. The company does not record trade discounts in a separate account in its general ledger. The gross method is used to record cash discounts.

a December 1 transaction

b December 11 transaction.

c December 31 transaction

Answer 1

Solution:

Lynch Inc.
Journal Entries
Date	Particulars	Debit	Credit
1-Dec-19	Accounts receivables Dr	$13,300.00
	To Sales revenue ($20,000*70%*95%)		$13,300.00
	(To record sales on account)
11-Dec-19	Cash Dr	$5,213.60
	Sales discount Dr	$106.40
	To Accounts receivables		$5,320.00
	(To record collection from customer)
31-Dec-19	Cash Dr	$7,980.00
	To Accounts receivables		$7,980.00
	(To record collection from customer)