When a Credit Sale Is Made with Terms of 2/10,n/30

question 85

Multiple Choice

When a credit sale is made with terms of 2/10,n/30 on May 10 and the customer's check is received on May 19,which of the following is true about the May 19 journal entry?

• A)The debit to cash will equal the credit to accounts receivable because the discount was recorded on May 10.
• B)There will be a debit to sales discounts on May 10.
• C)The debit to cash will be less than the credit to accounts receivable on May 19.
• D)There will be a credit to sales discounts on May 19.

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Definitions:

Deferred Annuity

An annuity contract that delays payments of income, installments or a lump sum until the investor elects to receive them.

Ordinary Annuity

Unchanging installments paid at the finale of successive terms over a fixed duration.

Deferred Annuity

An annuity contract that delays payments until the investor elects to receive them, usually at retirement.

Ordinary Annuity

Periodic equal distributions made at the terminus of each phase throughout a determined period.