Monica's Closet received payment in full for goods sold within the discount period on a $480 sales invoice, terms 2/10, n/30. Which entry records this transaction?

Question

Quizplus · Accepted Answer

To record the payment in full within the discount period, we need to debit Cash for the amount received after the discount ($480 x 0.98 = $470.40) and debit Sales Discount for the discount amount ($480 x 0.02 = $9.60), and credit Accounts Receivable for the full amount of the invoice ($480). Therefore, the correct entry is Debit Cash for $470.40, debit Sales Discount for $9.60; and credit Accounts Receivable for $480.

Monica's Closet Received Payment in Full for Goods Sold Within