Question

A company uses the gross method to account for cash discounts offered to its customers. If payment is made before the discount period expires, which of the following is correct?

Answer 1

Answer:

I don't know what are the options available but I know how to account for the cash discounts. For example if the company $10 of discount to the customer for purchasing $100, then the accounting treatment will be as under:

Dr Cash discount (Expense in nature)   10

Dr  Cash Received                                   100

Cr          Sales                                                     110