On April 1, Snell Company made a $50,000 sale giving the customer terms of 3/10/n30. The receivable was collected from the customer on April 8. Considering the collection of cash from the receivable, what effect will the transaction have on the company's statements?

Question

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$50,000 × 3% = $1,500 discount. Snell Company would collect $48,500 ($50,000 - $1,500 discount). Assets (cash) would increase by $48,500, assets (accounts receivable) would decrease by $50,000, and sales revenue would decrease by $1,500, which would decrease net income and equity. The company would report a $48,500 cash inflow from operating activities.

On April 1, Snell Company Made a $50,000 Sale Giving