Question

​February 1, Adams Company sold merchandise on credit with a list price of $8,400. Terms were 3/15, n/45. Which of the following entries correctly applies the indicated method to receive the appropriate customer payment on February 12?

a) Debit Accounts Receivable $8,400, Credit Sales Revenue $8,400
b) Debit Cash $8,400, Credit Sales Revenue $8,400
c) Debit Accounts Receivable $8,148, Credit Sales Revenue $8,148
d) Debit Cash $8,148, Credit Sales Revenue $8,148
e) Debit Accounts Receivable $8,400, Credit Cash $8,400

Answer 1

The correct entry to receive the appropriate customer payment on February 12 is to debit Cash $8,148 and credit Sales Revenue $8,148.

Step-by-step explanation:

The correct entry to receive the appropriate customer payment on February 12 is option d) Debit Cash $8,148, Credit Sales Revenue $8,148.

When the terms are 3/15, n/45, it means that if the customer pays within 15 days, they will receive a 3% discount. The customer in this case paid on February 12, which is within the 15-day discount period.

The list price of the merchandise is $8,400, but with the 3% discount, the amount paid is $8,148. Therefore, the correct entry is to debit Cash $8,148 and credit Sales Revenue $8,148.