Final answer:
Restin Co. records the initial sale and the receipt of payment using the net method for cash discounts. The sale is recorded at a discounted price due to the terms 4/15, n/45, and the payment received within the discount period is also recorded at the discounted amount.
Step-by-step explanation:
Restin Co. uses the net method for accounting for cash discounts on sales. The terms given on the sale of $58,200 are 4/15, n/45. This means that the customer can take a 4% discount if the payment is made within 15 days; otherwise, the net (full) amount is due within 45 days.
On June 1, 2014, when the sale was made, the journal entry to record the sale at the discounted price would be:
On June 12, 2014, when the full payment was received within the discount period, the journal entry would be:
Since the payment was made within the discount period, Restin Co. records the receipt of cash at the discounted amount.