On Feb 10, Amara Inc. sold goods to a customer for $8,000 with credit terms 2/10, n/30. The company uses the net method of accounting for sales discounts. What entry would the company make on Mar 10, assuming the correct payment was received on that date?

The answer is given below;

Explanation:

March 10

Bank Dr.$8,000

Accounts Receivable Cr.$7,840

Sales Discount (8,000*2%) Cr.$160

As the payment was not received within 10 days from the date of sale, therefore 2% discount will be reversed and full payment will be received.