Question

AG Inc. made a $25,000 sale on account with the following terms: 1/15, n/30. If the company uses the net method to record sales made on credit, how much should be recorded as revenue?

a. $24,500.
b. $24,750.
c. $25,000.
d. $25,250.

Answer 1

The amount recorded as revenue should be $24,750.

Step-by-step explanation:

To record the sale using the net method, we need to take into account the terms of the sale: 1/15, n/30. This means that if the payment is made within 15 days, a 1% discount can be applied, otherwise, the full payment is due within 30 days. To calculate the recorded revenue, we need to subtract the discount from the total amount:

$25,000 - ($25,000 x 1%) = $24,750

Therefore, the amount recorded as revenue should be $24,750. So, the correct answer is b. $24,750.