On October 30, goods with a list price of $9,500 are sold, subject to a trade discount of 25 percent with terms of 2/10, n/30. Payment is received from the customer on November 5. The amount recorded in the Sales Discounts Debit column on November 5 is

Question

Quizplus · Accepted Answer

The trade discount given is 25%, which means that the customer pays only 75% of the list price. Therefore, the amount actually received is:
$9,500 x 0.75 = $7,125
The terms are 2/10, n/30, which means that the customer can take a 2% discount if payment is made within 10 days, otherwise the full amount is due within 30 days.
Since payment is made on November 5, which is within 10 days, the customer is entitled to take the discount. The discount amount is:
$7,125 x 0.02 = $142.50
Therefore, the amount recorded in the Sales Discounts Debit column on November 5 is $142.50.

On October 30, Goods with a List Price of $9,500