On April 1, the Caesar Coffee Company sold coffee to Charbucks for $300, with credit terms of 2/15, n/30 Charbucks paid Caesar's on April 10. The journal entry that Caesar would make to record the payment would include a:

Question

Quizplus · Accepted Answer

The correct answer is C because the terms 2/15, n/30 mean that Charbucks gets a 2% discount if they pay within 15 days. Since they paid on April 10, they took advantage of the discount. The original amount was $300, so the discount is $300 * 2% = $6. Therefore, Caesar Coffee Company receives $294 in cash, recognizes a $6 discount, and credits the full $300 from Accounts Receivable.

On April 1, the Caesar Coffee Company Sold Coffee to Charbucks