Question

Merchandise was sold on credit for $3,000, terms 1/10, n/30. the entry to record the cash collection should include which of the following?

a. debit cash, $3,000, and credit trade receivables, $3,000, if collected within the discount period.
b. debit cash, $3,000, and credit trade receivables, $2,970, and sales discount, $30, if collected after the discount period.
c. debit cash, $3,000, and credit trade receivables, $3,000, if collected after the discount period.
d. debit cash, $3,000, and credit trade receivables, $2,970, and sales discount, $30, if collected within the discount period.

Answer 1

The collection within the discount period requires recording a sales discount and debiting cash for the discounted amount. After the discount period, cash is debited for the full amount with no discount recorded.

Step-by-step explanation:

The correct entry to record the cash collection on the sale of merchandise on credit for $3,000, terms 1/10, n/30, depends on when the payment is made. If the collection is made within the discount period, the correct entry is option D: debit Cash for $2,970, credit Trade Receivables for $2,970, and debit Sales Discount for $30. If collected after the discount period, the correct entry is option C: debit Cash for $3,000 and credit Trade Receivables for $3,000, with no sales discount recorded.