Question

On November 10 of the current year, Flores Mills sold carpet to a customer for $7,700 with credit terms 2/10, n/30. Flores uses the gross method of accounting for sales discounts. What is the correct entry for Flores on November 17, assuming the correct payment was received on that date

Answer 1

Flores Mills:

The correct entry for Flores on November 17 using the gross method of accounting for sales discounts is as follows:

Journal Entry

November 17:

Debit Cash $7,546

Debit Cash Discounts $154

Credit Accounts Receivable $7,700

To record the receipt of cash from a customer on account, including 2% discounts allowed for payment within 10 days.

Step-by-step explanation:

a) Data and Analysis:

November 10: Accounts Receivable $7,700 Sales Revenue $7,700

with credit terms 2/10, n/30.

November 17: Cash $7,546 Cash Discounts $154 Accounts Receivable $7,700