Question

Merchandise with a sales price of $9,300 is sold on account with terms 2/10, n/30. The journal entry to record the sale would include a:_________. a. debit to Accounts Receivable for $9,300 b. debit to Cash for $9,300 c. debit to Customer Refunds Payable for $186 d. credit to Sales for $9,114

Answer 1

Answer:

A) debit to Accounts Receivable for $9,300

Explanation:

The journal entry to record the sale should be:

XX, YY, merchandise sold on account, credit terms 2/10, n/30

Dr Accounts receivable 9,300

    Cr Sales revenue 9,300

Credit terms 2/10, n/30 means that if the customer pays within the discount term (10 days) they will get a 2% discount. If the customer pays after the discount term and before 30 days, they have to pay the full invoice price.

Answer 2

Answer:

The correct answer is Option A.

Explanation:

The appropriate entries that would be recorded are, regardless of the discounts offered:

Debit Accounts receivable          $9,300

Credit Sales revenue                   $9,300

(To record sales transaction)

The above journals hold until the discount is established. The cash discount terms of 2/10, n/30 means 2% cash discount if paid within 10 days of the credit sale and net 30 means payment of full invoice within 30 days. The essence of the 2% cash discount is to encourage early payment of credit sale.