Final answer:
A credit sale of $4,000 with terms of 3/10, n/30, when paid within the discount period, would be recorded by debiting Cash for $3,880, Sales Discounts for $120, and crediting Accounts Receivable for $4,000.
Step-by-step explanation:
The subject of the question relates to accounting which falls under the Business category, and the complexity of the question is suitable for a College-level student. When a credit sale of $4,000 is made on July 1st with terms of 3/10, n/30, and payment is collected on July 3rd with the discount applied, the accounting entry to record the collection would involve debiting Cash and Sales Discounts, and crediting Accounts Receivable. The calculation for the discount would be 3% of $4,000, which equals $120. Therefore, the cash received would be $4,000 - $120 = $3,880. The corresponding journal entry would look like this:
- Cash (Debit) $3,880
- Sales Discounts (Debit) $120
- Accounts Receivable (Credit) $4,000
This entry reflects that the customer took advantage of the discount offered for paying early, and the business recognized a reduction in revenue due to the sales discount.