Cynthia's Crystals sold $1,000 worth of crystal plus 5% GST and 8% PST to a charge customer with terms 2/10, n/30. The invoice was paid within terms. The entry to record receipt of payment is

Question

Quizplus · Accepted Answer

The total amount due on the invoice including taxes is:
$1,000 + 5% GST ($50) + 8% PST ($80) = $1,130

Since the invoice was paid within terms (2/10, n/30), the customer is entitled to a cash discount of 2% on the amount due ($1,130 x 2% = $22.60). Therefore, the amount actually received by the company is:
$1,130 - $22.60 = $1,107.40

The entry to record receipt of payment would then be:
Debit Cash $1,107.40
Debit Cash Discounts $20.60
Credit Accounts Receivable $1,130

Option C is the closest to this answer as it is the only option showing both cash and cash discount debited, and accounts receivable credited.

Cynthia's Crystals Sold $1,000 Worth of Crystal Plus 5% GST