Question

Assume a customer who purchased goods from Smart Touch Learning on account with terms​ 2/15, n/60 paid the invoice within the discount period. Smart Touch Learning would record a journal entry that would include a

Answer 1

A customer taking advantage of the 2/15, n/60 discount terms would prompt Smart Touch Learning to record a payment by debiting Cash and Sales Discounts while crediting Accounts Receivable.

Step-by-step explanation:

When a customer pays an invoice within the discount period, the seller would record the receipt of payment and the sales discount that the customer took advantage of. The credit terms offered by Smart Touch Learning, 2/15, n/60, mean that the customer can take a 2% discount on the invoice total if they pay within 15 days; otherwise, the net amount of the invoice is due within 60 days. If the payment is made within this discount period, the journal entry by Smart Touch Learning to record the transaction would include a debit to Cash for the amount paid, a debit to Sales Discounts for the amount of the discount, and a credit to Accounts Receivable for the full invoice amount.

Here's a step-by-step explanation of the journal entry:

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