Maxie's Game World sold games to a customer on credit for $2,600,terms 1/10,n/30 and the cost of the games was $1,700.When recording the collection from the customer made within the discount period,in its cash receipts journal,Maxie's would enter:
A)$2,600 in the Cash Dr.column and $2,600 in the Accounts Receivable Cr.column.
B)$2,574 in the Cash Dr.column and $2,574 in the Accounts Receivable Cr.column.
C)$2,574 in the Cash Dr.column,$26 in the Sales Discount Dr.column and $2,600 in the Accounts Receivable Cr.column.
D)$2,600 in the Accounts Receivable Dr./Sales Cr.column and $2,600 in the Cash Cr.column.
E)$2,600 in the Cash Dr.column.$2,600 in the Sales Cr.column,and $1,700 in the Cost of Goods Sold Dr./Inventory Cr.column.

Question

Quizplus · Accepted Answer

Within the discount period, the customer is entitled to a 1% discount on the amount owed ($2,600 x 0.01 = $26). Therefore, the total amount collected would be $2,600 - $26 = $2,574. This amount should be entered in the cash debit column, the sales discount debit column (to record the discount), and the accounts receivable credit column.

Maxie's Game World Sold Games to a Customer on Credit