Secret Trails received payment in full within the credit period for horse boarding for $1,300 plus 4% sales tax. Terms of the sale were 3/10, n/30. Which entry is required to record this? (Round intermediary calculations to the nearest cent and final answers to the whole dollar.)

Question

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The correct entry accounts for the sales tax by adding 4% to the $1,300, making it $1,352. The 3% discount on the payment within 10 days is applied to this amount, resulting in a discount of $40.56 (rounded to $40 for simplicity), making the cash received $1,312 ($1,352 - $40). However, since the final answers are rounded to the whole dollar and intermediary calculations might slightly differ, the closest option reflecting the sales tax, discount, and the principle of recording both the cash received and the discount is option B, despite the slight discrepancy in discount calculation. It acknowledges the sales discount and adjusts the accounts receivable accordingly.

Secret Trails Received Payment in Full Within the Credit Period