On July 22, Peter sold $15,500 of inventory items on credit with the terms 2/15, net 30. Payment on $10,000 sales was received on August 1 and the remaining payment was received on August 12. Assuming Peter uses the gross method of accounting for sales discounts, which one of the following entries was made on August 1 to record the cash received? a. Cash 9,800Sales Discount 200Accounts Receivable 10,000b. Cash 10,000Accounts Receivable 10,000c. Cash 9,800Accounts Receivable 9,800d. Accounts Receivable 200Sales Discount Forfeited 200

Question

Business

Waller

13 August, 13:03

On July 22, Peter sold $15,500 of inventory items on credit with the terms 2/15, net 30. Payment on $10,000 sales was received on August 1 and the remaining payment was received on August 12. Assuming Peter uses the gross method of accounting for sales discounts, which one of the following entries was made on August 1 to record the cash received? a. Cash 9,800Sales Discount 200Accounts Receivable 10,000b. Cash 10,000Accounts Receivable 10,000c. Cash 9,800Accounts Receivable 9,800d. Accounts Receivable 200Sales Discount Forfeited 200

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Answers (1)

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Jenna Burke · Answer 1

a. Cash 9800, 200 sales, and accounts receivable 10000.

Explanation:

In gross method we assume that discount will not be taken. So, first we record the sale without disscount (10000 in accounts receivable). When the discount is taken, so we record it as sales discount and record the cash received (debit in journal entry) and we credit the receivable in journal entry.