Question

On Feb 10, Amara Inc. sold goods to a customer for $8,000 with credit terms 2/10, n/30. The company uses the net method of accounting for sales discounts. What entry would the company make on Mar 10, assuming the correct payment was received on that date?

Answer 1

Answer:

The answer is given below;

Explanation:

March 10

Bank       Dr.$8,000

Accounts Receivable       Cr.$7,840

Sales Discount (8,000*2%)                 Cr.$160

As the payment was not received within 10 days from the date of sale, therefore 2% discount will be reversed and full payment will be received.