Question

On August 2, Home Run Apparel sold $30,000 of inventory items on credit with the terms 1/10, net 30. Payment on $18,000 sales was received on August 8 and the remaining payment on $12,000 sales was received on August 27. What would be included in the entry for August 27 under the net method

Answer 1

Dr. Cash $12,000

Cr . Account receivable $12,000

Step-by-step explanation:

Term 1/10, net 30 means there is a 1% discount available for customers if they payment is made with 10 days after sale and net credit period is 30 days. Payment against $18,000 sales is received within the discount period so, it is eligible for discount but Payment against $12,000 sales is made on August 27 after Discount period, so it was paid without any discount deduction.

Payment = $12,000