ABC company sells goods to the XYZ Company for $1,000, It offers credit terms of 2/10, n/30. If XYZ Company pays the invoice within the discount period, ABC Company will record a debit to cash in the amount of:

Question

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The credit terms "2/10, n/30" means that XYZ Company has a 10-day discount period, during which they can subtract 2% (or $20) from the $1,000 invoice. If they pay within those 10 days, they will only owe $980. Therefore, if XYZ Company pays within the discount period, ABC Company will receive a debit to cash in the amount of $980.

ABC Company Sells Goods to the XYZ Company for $1,000