Question

On April 1, Moloney Meat Distributors sold merchandise on account to Fronke’s Franks for $1,600 on Invoice 1001, terms 3/10, n/30. Payment was received in full from Fronke’s Franks, less discount, on April 10. Required: Record the transactions on April 1 and April 10.

Answer 1

Answer:

April 1

Dr.  Account receivable  $1,600

Cr.  Sales                          $1,600

April 10

Dr.  Cash                          $1,552

Dr.  Sales Discount          $48

Cr.  Account receivable  $1,600

Explanation:

Term 3/10, n/30 means there is a discount of 3% is available on payment of due amount within discount period of 10 days after sale and net credit period of 30 days.

According to given data

Sales = $1,600

As the payment is made within discount period, so discount will be availed

Discount  = $1,600 x 3% = $48

Payment = $1,600 - $48 = $1,552

Discount of $48 is an expense.