On January 2, Well Corporation sold merchandise with a gross price of $140,000 to Priority Corporation with terms of 2/10, n/30. How much sales discounts would be recorded if payment was received on January 8?

Question

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The terms 2/10, n/30 mean that Priority Corporation can take a 2% discount if payment is made within 10 days, otherwise the full amount is due within 30 days. If payment is received on January 8, that is within 10 days of the sale. Therefore, Priority Corporation can take a 2% discount.

Sales discounts are calculated as the discount percentage times the gross price. In this case, the discount percentage is 2% and the gross price is $140,000.

Sales discount = 2% x $140,000 = $2,800

Therefore, the answer is A) $2,800.

On January 2, Well Corporation Sold Merchandise with a Gross