On April 2, Kelvin sold $30,000 of inventory items on credit with the terms 1/10, net 30. Payment on $18,000 sales was received on April 8 and the remaining payment on $12,000 sales was received on April 27. Assuming Kelvin uses the net method of accounting for sales discounts, the entry recorded on April 27 would include a:

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Under the net method, sales and receivables are recorded at the net amount after discount. If payment is made after the discount period, the difference is recognized as Sales Discount Forfeited. The $12,000 payment on April 27 missed the discount period, so the entry includes debiting Accounts Receivable and crediting Sales Discount Forfeited for the discount amount that was not taken, which is $120 (1% of $12,000).

On April 2, Kelvin Sold $30,000 of Inventory Items on Credit