When a credit sale is made with terms of 2/10, n/30 on May 10 and the customer's check is received on May 19, which of the following is true about the May 19 journal entry?

题目解析

Question

When a credit sale is made with terms of 2/10, n/30 on May 10 and the customer's check is received on May 19, which of the following is true about the May 19 journal entry?

题目解析

BlackTom AI · Accepted Answer

Question restatement: When a credit sale is made with terms of 2/10, n/30 on May 10 and the customer's check is received on May 19, which of the following is true about the May 19 journal entry?

Answer options:
1) The debit to cash will equal the credit to accounts receivable because the discount was recorded on May 10.
2) There will be a credit to sales discounts on May 19.
3) There will be a debit to sales discounts on May 10.
4) The debit to cash will be less than the credit to accounts receivable on May 19.

Analysis of each option:
Option 1: The debit to cash will equal the credit to accounts receivable because the discount was recorded on May 10.
- This statement is incorrect. The discount is not recorded on May 10 when the sale is made; it is recorded when the payment is received (May 19) if the discount is taken. Moreover, even if the discount is recorded later, the cash received is typically net of the discount, while the accounts receivable is reduced by the full amount, so the cash debit would not equal the accounts receivable credit.

Option 2: There will be a credit to sales discounts on May 19.
- This is not correct. When the customer takes the discount, a contra-revenue account (Sales Discounts) is typically debited to reflect the reduction in revenue due to the discount. Therefore, the entry on May 19 would include a debit to Sales Discounts, not a credit.

Option 3: There will be a debit to sales discounts on May 10.
- This is inaccurate. The discount is not recognized at the time of the sale (May 10); it is recognized at the time of payment (May 19) if the customer pays within the discount period. Therefore, no entry debiting Sales Discounts occurs on May 10.

Option 4: The debit to cash will be less than the credit to accounts receivable on May 19.
- This statement is correct. Under 2/10, n/30, the customer pays within 10 days, so they take a 2% discount. The cash received equals 98% of the invoice amount, which is less than the full amount recorded as Accounts Receivable. The entry on May 19 would typically be: Debit Cash for 98% of the invoice, Debit Sales Discounts for 2% (to offset revenue reduction), Credit Accounts Receivable for 100% of the invoice. Thus, the cash debit is indeed less than the AR credit.

In summary, evaluating each option shows that Option 4 accurately reflects how the May 19 entry would typically be recorded when the discount is taken within the allowed period, while the other options misstate when the discount is recognized or how the accounts are affected.

When a credit sale is made with terms of 2/10, n/30 on May 10 and the customer's check is received on May 19, which of the following is true about the May 19 journal entry? 题目解析

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