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A seller using the NET method sells 50 items on account for $15 each, terms 2/10 net 30, expecting payment within the discount period. At what amount is the sale recorded?
ADebit Accounts Receivable $750; credit Sales $750
BDebit Accounts Receivable $735; credit Sales $735
CDebit Accounts Receivable $750; credit Sales $735
DDebit Accounts Receivable $15; credit Sales $15
Answer & Solution
Correct answer: B. Debit Accounts Receivable $735; credit Sales $735
1. Gross selling price = 50 x $15 = $750.
2. Expected discount = $750 x 2% = $15.
3. Under the net method the sale is recorded net of the expected discount: $750 - $15 = $735.
4. The full $750 (option B) is the gross method; option D records only the discount amount.
_Source: Jonick, Principles of Financial Accounting (CC BY-SA 4.0), §3.3.2 "Discounts - The Seller", p.98_
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