A company records the following journal entry: debit Cash $1,470, debit Sales Discounts $30, and credit Accounts Receivable $1,500. This means that a customer has taken a ___ cash discount for early payment.
A) 1%
B) 2%
C) 5%
D) 10%
E) 15%

Question

Quizplus · Accepted Answer

The customer has taken a 2% cash discount for early payment, as the sales discount of $30 on a $1,500 invoice represents a 2% discount ($30 is 2% of $1,500).

A Company Records the Following Journal Entry: Debit Cash $1,470