Question

1.            AG Inc. made a $25,000 sale on account with the following terms: 1/15, n/30. If the company uses the net method to record sales made on credit, how much should be recorded as revenue?

2.            AG Inc. made a $25,000 sale on account with the following terms: 1/15, n/30. If the company uses the gross method to record sales made on credit, Accounts Receivable is debited for how much?

3.            AG Inc. made a $25,000 sale on account with the following terms: 2/10, n/30. If the company uses the net method to record sales made on credit, Accounts Receivable is debited for how much?

Answer 1

Answer- a)- If the company uses the net method to record sales made on credit, revenue should be recorded as = Sales amount –Discount amount

= $25000 – ($25000*1%)

= $25000 - $250

= $24750

b)- If the company uses the gross method to record sales made on credit, Accounts Receivable is debited for= $25000.

c)- )- If the company uses the net method to record sales made on credit, Accounts Receivable is debited for= Sales amount –Discount amount

= $25000 – ($25000*2%)

= $25000 - $500

= $24500