A manufacturing company sells goods to a merchandising company, which in turn, sells the goods to a retail customer. The Sales Discounts account is debited by the merchandising company when:

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Under a perpetual inventory system, when a seller (merchandising company) receives payment for merchandise within the discount period, the following entry is made by the seller (merchandising company):
Cash XXX
Sales discounts XXX
$\quad $ $\quad $ $\quad $ $\quad $ Account receivable XXX

A Manufacturing Company Sells Goods to a Merchandising Company, Which