AG Inc. made a $15,000 sale on account with the following terms: 1/15, n/30. If the company uses the net method to record sales made on credit, how much should be recorded as revenue?

Question

Quizplus · Accepted Answer

The net method records sales made on credit at the net amount (after the discount) that the customer is expected to pay within the discount period. The discount percentage is 1%, and this discount is offered if the customer pays within 15 days. If the customer does not take the discount, the full amount is expected within 30 days. Hence, the net amount due within 15 days is $15,000 - ($15,000 x 0.01) = $14,850. Therefore, $14,850 should be recorded as revenue under the net method.

AG Inc Made a $15,000 Sale on Account with the Following