Question

Lamps Unlimited, a wholesaler, sold several crates of lighting for $1,500 on account, to a customer with credit terms of 1/10, n/30. If the customer pays within the discount period, the journal entry to record the receipt of payment would include:

Answer 1

Dr Cash account 990

Dr Sales Discounts account 10

Cr Accounts Receivable account 1,000

Step-by-step explanation:

The total sales discount is 1% x $1,000 = $10

Sales discount is a contra revenue account and since it increases, it should be debited

Cash is an asset account and since it increases, it should be debited.

Accounts receivable is an asset account and since it decreases, it should be credited.