Question

Dollar Co. sold merchandise to Pound Co. on account, $25,500, terms 2/15, net 45. The Pound Co. paid the invoice within the discount period. What is the sales amount to be recorded in the above transactions?a. $25,500b. $26,010c. $24,990d. $16,000

Answer 1

Answer:

c. $24,990

Explanation:

The Term 2/15 net 45 mean 2% cash discount is offered if the payment is made within 15 days otherwise the credit period is 45 days. There is no after 15 days of sale.

Amount of Sale = $25,500

Discount Rate = 2%

The Pound Co. paid the invoice within the discount period. They are eligible to receive the 2% discount on sale value.

Discount Amount = $25,500 x 2% = $510

Net Sales amount in this transaction = $25,500 - $510

Net Sales amount in this transaction = $24,990