Home › ACCA › Financial Accounting › Purchase And Sales Discounts › A seller recorded a sale at the discounted $735 …
A seller recorded a sale at the discounted $735 under the NET method but the customer pays the full $750 AFTER the discount period. Which account records the extra $15 collected?
AAllowance for Sales Returns
BSales Discounts
CSales Discounts Not Taken
DCost of Sales
Answer & Solution
Correct answer: C. Sales Discounts Not Taken
1. The sale was booked net at $735, but $750 cash is collected, an extra $15.
2. Under the net method, a discount the customer fails to take is credited to Sales Discounts Not Taken.
3. Sales Discounts is used under the gross method, the opposite situation.
4. Allowance for Sales Returns concerns returns, and Cost of Sales concerns inventory cost, so neither applies.
_Source: Jonick, Principles of Financial Accounting (CC BY-SA 4.0), §3.3.2 "Discounts - The Seller", p.99_
Related questions
A seller recorded a $750 sale under the GROSS method (terms 2/10 net 30) but the customer A seller using the NET method sells 50 items on account for $15 each, terms 2/10 net 30, eA seller using the GROSS method sells 50 items on account for $15 each, terms 2/10 net 30,Under the perpetual system a buyer purchased 50 items at $10 each on account, terms 2/10 nAn invoice carries the terms "2/10, net 30". What do these terms mean?