If merchandise is sold for $2,000 subject to credit terms of 2/10, n/30, the entry to record collection in full within the discount period would include a:
A) debit to Sales Discounts for $40.
B) credit to Cash for $1,960.
C) credit to Accounts Receivable for $40.
D) None of the above.

Question

Quizplus · Accepted Answer

The discount is 2% of $2,000, which is $40. The entry would include a debit to Sales Discounts for $40 to account for the discount given.

If Merchandise Is Sold for $2,000 Subject to Credit Terms