Question

On March 12, a company provides services on account to an individual Hospital for $9,100, terms 2/10, n/30. An individual does not pay for services until March 31, missing the 2% sales discount.
Required:

For an individual Hospital, record the purchase of services on account on March 12 and the payment of cash on March 31.

Answer 1

To record the transactions with the individual hospital company, the following journal entries are made:

Journal Entries:

March 12: Debit Accounts Receivable $9,100

Credit Services Revenue $9,100

• To record the sale of services on terms 2/10, n/30.

March 31: Debit Cash $9,100

Credit Accounts Receivable $9,100

• To record the receipt of cash in full settlement.

Transaction Analysis:

March 12: Accounts Receivable $9,100 Sales Revenue $9,100

Terms 2/10, n/30

March 31: Cash $9,100 Accounts Receivable $9,100

Thus, the journal entries for the customer do not require the recognition of the 2% sales discount since the customer could not pay within the discount window.

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