Instructions Eastman Corporation sells merchandise with a list price of $17,000 on February 1, 2019, with terms of 1/10, n/30. On February 10, 2019, payment was received on merchandise originally billed for $7,000, and the balance due was received on March 1, 2019 Required: 1. Prepare the journal entries to record the preceding information assuming that Eastman records accounts receivable and sales at (a) the gross price and (b) the net price. 2. Next Level What implied annual interest rate is Eastman's customer incurring by failing to take the cash (sales) discount? (Assume a 365-day year) 3. Next Level Which method_recording accounts receivable at the gross price or net price1S theoretically superior? Why? General Journal 1a. Prepare the journal entries to record the transactions assuming that Eastman records accounts receivable and sales at the gross price. General Journal Instructions PAGE 1 GENERAL JOURNAL POST. REF. DEBIT CREDIT ACCOUNT TITLE DATE 1 Feb. 1 17,000.00 Accounts Receivable 17,000.00 2 Sales Revenue 3 Feb. 10 Cash 4 5 6 7 General Journal 1b. Prepare the journal entries to record the transactions assuming that Eastman records accounts receivable and sales at the net price. General Journal Instructions PAGE 1 GENERAL JOURNAL DATE ACCOUNT TITLE POST. REF. DEBIT CREDIT 1 2 3 4 6 7 Next Level 2. What implied annual interest rate is Eastman's customer incurring by failing to take the cash (sales) discount? (Assume a 365-day year.) Additional Instruction With a discount rate of 1% and assuming a 365-day year, Eastman's customer is incurring an annual interest rate of % 3. Which method-recording accounts receivable at the gross price or net priceis theoretically superior? Why? Recording receivables at the is the theoretically superior method because it values the receivable at the net realizable value and reports sales revenue at the amount that a company expects to be entitled. If receivables are recorded at their sales revenue is overstated. Chart of Accounts WYWIE 2 cu. ASSETS REVENUE (sa 111 Cash 411 Sales Revenue 121 Accounts Receivable 141 Inventory EXPENSES A 152 Prepaid Insurance 500 Cost of Goods Sold 181 Equipment 511 Insurance Expense 198 Accumulated Depreciation 512 Utilities Expense 521 Salaries Expense IN LIABILITIES 532 Bad Debt Expense 211 Accounts.Payable 540 Interest Expense 231 Salaries Payable 541 Depreciation Expense 250 Unearned Revenue 559 Miscellaneous Expenses 5 261 Income Taxes Payable 910 Income Tax Expense 6