Question

On November 10 of the current year, Flores Mills sold carpet to a customer for $8,000 with credit terms 2/10, n/30. Flores uses the gross method of accounting for cash discounts.What is the correct entry for Flores on November 10? How did you get the answer.A.) Accounts receivable 7,840Sales 7,840B.) Accounts receivable 8,000Sales 8,000C.) Accounts receivable 7,840Cash discounts 160Sales 8,000D.) Accounts receivable 8,000Cash discounts 160Sales 7,840

Answer 1

Answer:

B) Accounts receivable 8,000; Sales 8,000

Explanation:

As the math does not entail which inventory methods to be used, I assume it to be a periodic inventory system.

In the periodic inventory system, the credit sales do not follow any rules irrespective of gross methods or net methods.

Option A is incorrect as that option deducts the discount, but did not have the discount entry.

Option C is incorrect as that option provides the payment date related journal.

Option D is wrong due to the same problem.

Option B is the current answer;

Accounts receivable 8,000; Sales 8,000. As sales are on credits, it should have accounts receivables.