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14 January, 18:59

On November 10 of the current year, Flores Mills sold carpet to a customer for $7,600 with credit terms 4/10, n/30. Flores uses the gross method of accounting for sales discounts. What is the correct entry for Flores on November 17, assuming the correct payment was received on that date

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  1. 14 January, 19:02
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    The correct entries are:

    Dr Cash $7,296

    Dr Sales discount $304

    Cr Accounts receivable $7,600

    Explanation:

    First and foremost, the terms of sales transaction states that 4% cash discount is given if payment is made within the next ten days.

    Payment made on 17th of November is within the stipulated ten days and as a result the cash discount is allowed.

    The amount to be recorded as cash as (100%-4%) * $7600 = $7296

    The balance of $304 is the sales discount allowed

    The double entries would be as below:

    Dr Cash $7,296

    Dr Sales discount $304

    Cr Accounts receivable $7,600
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Home » Business » On November 10 of the current year, Flores Mills sold carpet to a customer for $7,600 with credit terms 4/10, n/30. Flores uses the gross method of accounting for sales discounts.
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