Oswego Clay Pipe Company sold $46,000 of pipe to Southeast Water District #45 on April 12 of the current year with terms 1/15, n/60. Oswego uses the gross method of accounting for cash discounts. What entry would Oswego make on April 12?

Question

Quizplus · Accepted Answer

Under the gross method of accounting for cash discounts, sales and accounts receivable are recorded at the gross amount of the sale. The discount is only recognized if the payment is made within the discount period. Therefore, the correct entry records the full sale amount of $46,000 without deducting the discount upfront.

Oswego Clay Pipe Company Sold $46,000 of Pipe to Southeast Accounts receivable 46,000 Sales 46,000\begin{array}{|c|r|r|}\hline \text { Accounts receivable } & 46,000 & \\\hline \text { Sales } & & 46,000 \\\hline\end{array} Accounts receivable Sales ​46,000​46,000​​

Oswego Clay Pipe Company Sold $46,000 of Pipe to Southeast $\begin{array}{|c|r|r|}\hline \text { Accounts receivable } & 46,000 & \\\hline \text { Sales } & & 46,000 \\\hline\end{array}$