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In December, a Global Grocer customer pays in time and receives a 2% discounts for prompt payment. The customer had purchased goods worth $500. Which of the possible answers below correctly states the journal entries to record the payment and the discount taken. Previously, Global Grocer had established an allowance for prompt payment discounts.

a) Debit Accounts receivable ($500); Credit Cash ($490); credit allowance for discounts ($10).

b) Debit Cash ($500); Credit Accounts receivable ($500).

c) Debit Cash ($490); Debit Allowance for sales discounts ($10); Credit Accounts receivable ($500)

d) None of the above

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M941222

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