Question

Merchandise with a sales price of $3,500 is sold on account with terms 2/10, n/60. The journal entry to record the sale would include a Group of answer choices debit to Cash for $3,500 debit to Merchandise Inventory for $70 debit to Accounts Receivable for $3,500 credit to Sales for $3,430

Answer 1

Answer:

debit to Accounts Receivable for $3,500 credit to Sales for $3,430

Explanation:

Merchandise with a sales price of $3,500 is sold on account with terms 2/10, n/60. The journal entry to record the sale would include a debit to Accounts Receivable for $3,500 credit to Sales for $3,430.

Since the goods were sold on account, it means that it was sold on credit and an entry to cash will be a wrong entry. The right Journal entry will be a debit to accounts receivable for the total amount and a credit to sales for the total amount less the proposed discount amount of 2%

Answer 2

Answer:

The journal entry that records the sale should be:

Dr Accounts receivable 3,500

    Cr Sales revenue 3,500

Explanation:

If the invoice is paid within the discount term, the journal entry should be:

Dr Cash 3,430

Dr Sales discount 70

    Cr Accounts receivable 3,500

The sales discount is recorded only if the customer actually pays within the discount period, if they pay later, you must collect full payment.