On January 2, Alfredo Corporation sold merchandise with a gross price of $100,000 to a customer with terms of 2/10, n/30. How much Sales Discounts would be recorded if payment was received from the customer on January 8? Assume the company uses the Gross Method of recording receivables.

Question

Quizplus · Accepted Answer

The terms 2/10, n/30 means that the customer can take a 2% sales discount if payment is made within 10 days. Otherwise, the full amount is due within 30 days. Since the customer paid on January 8 (within 10 days), they are entitled to take the discount. 
Using the Gross Method, the initial sale is recorded at the full amount of $100,000, and the Sales Discounts account is credited for the amount of the discount taken. 
Therefore, the Sales Discounts recorded would be:
($100,000 x 0.02) = $2,000. Answer B is correct.

On January 2, Alfredo Corporation Sold Merchandise with a Gross