A credit sale of $2,500, terms 1/20, n/30, should be recorded with which of the following journal entries? $\begin{array}{|l|l|r|r|}
\hline& &\mathrm{DR} & \mathrm{CR} \
\hline \text { A } & \text { Trade receivables } & 2,475 & \
& \text { Sales revenue } && 2,475\
\hline \text { B }
& \text { Allowance for discounts } & 25 & \
& \text { Accounts receivable } & 2,475 & \
& \text { Sales revenues } && 2,500 \
\hline \mathrm{C} & \text { Trade receivables } & 2,500& \
& \text { Sales revenue } & & 2,500\
\hline \mathrm{D} & \text { Trade receivables } & 2,500& \
& \text { Sales revenue } & &2,475 \
& \text { Sales discount } & & 25\
\hline
\end{array}$

Question

A credit sale of $2,500, terms 1/20, n/30, should be recorded with which of the following journal entries? $\begin{array}{|l|l|r|r|}
\hline& &\mathrm{DR} & \mathrm{CR} \
\hline \text { A } & \text { Trade receivables } & 2,475 & \
& \text { Sales revenue } && 2,475\
\hline \text { B }  
& \text { Allowance for discounts } & 25 & \
& \text { Accounts receivable } & 2,475 & \
& \text { Sales revenues } && 2,500 \
\hline \mathrm{C} & \text { Trade receivables } &  2,500& \
& \text { Sales revenue } & &  2,500\
\hline \mathrm{D} & \text { Trade receivables } &  2,500&  \
& \text { Sales revenue } & &2,475  \
& \text { Sales discount } & & 25\
\hline
\end{array}$

Quizplus · Accepted Answer

The correct journal entry for a credit sale of $2,500 with terms 1/20, n/30 is to record the entire sales amount as trade receivables and sales revenue at the time of the sale. Discounts are accounted for only when they are actually taken by the customer, not at the time of the sale.

A Credit Sale of $2,500, Terms 1/20, N/30, Should Be