Question

best discount store uses the perpetual system and had a sale on account to julie smith of $5,000 with terms 1/10, n/30. ms. smith did not pay within the discount period. the journal entry to record receiving payment from the sale on account using the net of - sales method would be:

Explanation:

Step1: Understand net - of - sales method

Under the net - of - sales method, the sale is initially recorded at the net amount (less the discount). Since the customer did not take the discount, we need to reverse the initial discount assumption.

Step2: Analyze the accounts involved

The amount of the sale is $5000 with terms 3/10, n/30. The initial net amount recorded for the sale would be $5000*(1 - 0.03)=$4850. Now that the discount is not taken, we need to increase the cash received to the full $5000 and reverse the sales discount forfeited. The debit to Cash is for the full amount of $5000, and the credit to Accounts Receivable is also for $5000 to clear the receivable balance.

Answer:

Date: [No specific date given in the requirement], Accounts: Cash, Debit: 5000, Credit: None; Accounts: Accounts Receivable, Debit: None, Credit: 5000 (corresponding to the second option in the multiple - choice presented in the image)