Question

Perez Computer Inc. Sold $20,000 of computer on july 1 to Robertson Company with tern 3/15, n/60. Perez uses the net method to record cash discounts. The journal entry on July 1 includes a ?

A) Debit to account receivable for $19,400

B) Debit to Sales for $20,000

C) Credit to Inventory for $20,000

D) Debit to account receivable for $20,000

Answer 1

Correct answer is option A = Debit to account recivable for 19,400.

Expanation : Journal entry recording sale

Accounts receivable Dr.    19,400

Sales 19,400

Using the net method of accounting for Cash discounts, record the discounted invoice amount as revenue in your records at the time of a sale, rather than the full invoice amount.

If customer didnt paid within time to receive cash discount , then we record the cash discount in a seperate account.

   Cash discount = 20,000 x 3% = $ 600 is allowed if paid within 15 days.