David Company uses the gross method to record sales made on credit. On June 10, 2014, it sold goods worth $200,000 with terms 2/10, n/30 to Charles Inc. On June 19, 2014, David received payment for 1/2 of the amount due from Charles Inc. David's fiscal year end is on June 30, 2014. What amount will be reported in the financial statements for the accounts receivable due from Charles Inc.?

Question

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Since Charles Inc. paid within the discount period for half of the amount, they would have paid $98,000 (half of $200,000 less 2% discount). The remaining balance due after the payment is $100,000, which will be reported as accounts receivable.

David Company Uses the Gross Method to Record Sales Made