Forever Jewelers uses the gross method and a perpetual inventory system.On April 2,Forever sold merchandise with a cost of $1,700 for $5,600 to a customer on account with terms of 2/15,n/30.Which of the following would be included in the journal entry to record the cash receipt on April 10?
A)Credit to Cash for $5,488
B)Credit to Sales Discounts for $112
C)Debit to Cash for $5,600
D)Debit to Sales Discounts for $112

Question

Quizplus · Accepted Answer

The customer paid within the discount period, so a 2% discount is applied. The discount amount is $112 (2% of $5,600), which is recorded as a debit to Sales Discounts.

Forever Jewelers Uses the Gross Method and a Perpetual Inventory