Secret Trails received payment in full within the credit period for horse boarding for $900 plus 6% sales tax.Terms of the sale were 2/10,n/30.Which entry is required to record this payment?

Question

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The terms of 2/10, n/30 indicate that the buyer can receive a 2% discount if paid within 10 days, or the full amount is due within 30 days. Since the customer paid within the credit period (which is 30 days), they are entitled to a 2% discount.

The total amount due is $900 + (6% of $900) = $954. Since the customer paid within the discount period, they are entitled to a discount of 2% of $900, which is $18. Therefore, the entry to record this payment would be:

Debit Cash $936 
Debit Sales Discount $18 
Credit Accounts Receivable $954

Option A is incorrect because it does not account for the sales tax, which is part of the total amount due. Option C is incorrect because it does not account for the discount taken. Option D is incorrect because it does not account for the discount taken or the sales tax.

Secret Trails Received Payment in Full Within the Credit Period