Answer:
The entry must be:
Dr Trade Receivable (3000 - 5%) $2850
Cr Sale Accrued $2850
Explanation:
The standard says that the entry must be made with the amount price minus trade discount.
Sales Amount = Sales revenue - Trade Discount = $3000 - 5% = $2850
So this is the amount that we will receive and must be recorded as revenue and receivable. So the entry would be:
Dr Trade Receivable (3000 - 5%) $2850
Cr Sale Accrued $2850
Answer:
B) $2,850
Explanation:
Since the 5% discount is directly offered to the customer, then the sale should be recorded at its net value = $3,000 x (1 - 5%) = $2,850
The journal entry to record the sale should be:
Dr Accounts receivable 2,850
Cr Sales revenue 2,850
Generally when companies offer discounts for early payments (e.g. 5/10, N/30), the discounts are not recorded at the moment of the sale, but only once the invoice is actually paid.
