Question

Hunter’s paradise sells merchandize on account to outdoor haven for $3,280, terms 2/10, n/30. what should the journal entry be to record this transaction for hunter’s paradise?

Answer 1

Accounts Receivable $3280

Sales Revenue $3280

In accounting, the terms 2/10 and n/30 mean that they gave Outdoor Haven a 2% discount if paid in 10 days however, if they take 30 days to pay in full the amount will increase by 2%.

Answer 2

These are payment terms in the accounting. The first term 2/10 means that if you can pay the amount after 10 days, you would be given a 2% discount. If not, that's what the second terms means. This means you have to pay the net or full amount within 30 days.

So, if he can pay within 10 days, he will only have to give $3214.4. If not, then he would have to pay $3280 within 30 days.