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Hole Sailors, Inc. sold merchandise on credit with a list price of $12,000. Terms were 1/20,...

Hole Sailors, Inc. sold merchandise on credit with a list price of $12,000. Terms were 1/20, n/45. Which of the following entries correctly applies the indicated method to record the sale?

A

Net Price Method
Accounts Receivable 12,000
Sales 12,000

B

Net Price Method
Accounts Receivable 11,400
Sales 11,400

C

Net Price Method
Accounts Receivable 10,800
Sales 10,800

D

Gross Price Method
Accounts Receivable 12,000
Sales 12,000
Business   Accounting   
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Answer #1

Solution:

Correct answer is "Option D. "

Gross Price Method
Accounts Receivable 12,000
Sales 12,000

Explanation:

Under Gross method, full sales amount is recorded at the time of sale.

Under Net method, Net sale (Sales - discount) is recorded at the time of sale.

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