JournaldrillSales discount taken
A journal entry exercise from Journaldrill. Solve it with an account picker and debit and credit fields in your browser, and it is checked the moment you submit.
The task
Pioneer Supply sold $5,000 of merchandise on account, terms 2/10, n/30, and recorded the sale at the gross amount. The customer pays within the discount period. Record the collection.
What this exercise teaches
The customer takes a 2% discount of $100 ($5,000 x 2%) and pays $4,900. Accounts Receivable is credited for the full $5,000 to clear it, Cash is debited for $4,900, and the $100 goes to Sales Discounts, which reduces net sales. Inventory and Cost of Goods Sold were already handled when the sale was made.
A hint if you get stuck
The full receivable is cleared even though less cash comes in, and the difference goes to a contra revenue account.
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