Question

Oswego clay pipe company sold of pipe to southeast water district #45 on of the current year with terms . oswego uses the gross method of accounting for cash discounts. what entry would oswego make on april 12?

Answer 1

Oswego would debit accounts receivable with the amount of 46,000 and credit sales, also 46,000 for the period April 12. No terms have been inputted yet because we are using the gross method (meaning gross sales amount). So if there are terms given, like discounts after 15 or 30 days, it will only apply when the day of the discount comes.