Singh Company received payment in full within the discount period for goods sold for $400 plus 13% HST. Terms of the sale were 2/10, n/30. Which entry records this transaction?

Question

Quizplus · Accepted Answer

The correct entry to record the transaction is to debit Cash for the amount received after taking the discount into account, debit Sales Discounts for the discount amount, and credit Accounts Receivable for the full invoice amount including HST. The sale amount including HST is $400 + ($400 * 13%) = $452. The discount is 2% of $400 = $8. Therefore, the cash received is $452 - $8 = $444. This makes option B correct.

Singh Company Received Payment in Full Within the Discount Period