Question

On November 10 of the current year, Flores Mills sold carpet to a customer for $8,500 with credit terms 2/10, n/30. Flores uses the gross method of accounting for cash discounts.
1. What is the correct entry for Flores on November 10?
Multiple Choice:
A. Accounts receivable 8,500
Sales 8,500
B. Accounts receivable 8,330
Cash discounts 170
Sales 8,500
C. Accounts receivable 8,330
Sales 8,330
D. Accounts receivable 8,500
Cash discounts 170
Sales 8,330

Answer 1

Answer:

Cash A/c Dr                   $8,330

Sales Discount A/c Dr $170

     To  Accounts receivable A/c    $8,500

(Being cash received recorded)

Explanation:

The journal entry is shown below:

Cash A/c Dr                   $8,330

Sales Discount A/c Dr $170

     To  Accounts receivable A/c    $8,500

(Being cash received recorded)

The discount would be

= Accounts receivable × percentage given

= 8,500 × 2%

= $170

And, The remaining amount would be debited to the cash account.

Note: This is the answer but the same is not provided in the given options