A company uses the gross method to account for cash discounts offered to its customers. If payment is made before the discount period expires, which of the following is correct?

Question

Amaya Valentine

Business

22 December, 08:32

A company uses the gross method to account for cash discounts offered to its customers. If payment is made before the discount period expires, which of the following is correct?

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Answers (1)

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Simone Bean · Answer 1

I don't know what are the options available but I know how to account for the cash discounts. For example if the company $10 of discount to the customer for purchasing $100, then the accounting treatment will be as under:

Dr Cash discount (Expense in nature) 10

Dr Cash Received 100

Cr Sales 110