Question

On November 10 of the current year, Flores Mills provides services to a customer for $8,000 with credit terms 2/10, n/30. The customer made the correct payment on December 5. How would Flores record the collection of cash on December 5?
A. Cash 7,840
Accounts Receivable 7,840
B. Cash 7,840
Sales Discounts 160
Accounts Receivable 8,000
C. Cash 7,840
Sales Revenue 160
Accounts Receivable 8,000
D. Cash 8,000
Accounts Receivable 8,000

Answer 1

Answer:

D. Cash 8,000

Accounts Receivable 8,000

Explanation:

The commercial terms of the transactions are as follow:

2/10 within the first 10 days of the invoice The payment will be grnated with 2% discount

n/30 during the next 30 days of invoice date, the payment to cancel will be the nominal

The payment is after the discount period, it will be at nominal which is 8,000