A company receiving payment of a $20,000 accounts receivable within 10 days with terms of 2/10, n/30, would record a sales discount of:

Question

Quizplus · Accepted Answer

The terms 2/10, n/30 mean that the purchaser can take a 2% discount off the total amount owed if they pay within 10 days. Otherwise, the full amount is due within 30 days.

In this case, the purchaser does take advantage of the 2% discount by paying within 10 days, so the sales discount would be:
2% x $20,000 = $400.

Therefore, the correct answer is B) 2% of $20,000.

A Company Receiving Payment of a $20,000 Accounts Receivable Within