The Entry to Record the Receipt of Payment Within the Discount

question 206

Multiple Choice

The entry to record the receipt of payment within the discount period on a sale of $900 with terms of 2/10, n/30 will include a

• A)credit to Sales Discounts for $18.
• B)debit to Sales Revenue for $882.
• C)credit to Accounts Receivable for $900.
• D)credit to Sales Revenue for $900.

---

Definitions:

Liquidation

In regard to corporations, the process by which corporate assets are converted into cash and distributed among creditors and shareholders according to specific rules of preference. In regard to bankruptcy, a proceeding under Chapter 7 of the Bankruptcy Code, often referred to as ordinary or straight bankruptcy, in which a debtor states his or her debts and turns all nonexempt assets over to a trustee, who sells the nonexempt assets and distributes the proceeds to creditors. With certain exceptions, the remaining debts are then discharged, and the debtor is relieved of the obligation to pay the debts.

Dissolution

The process of legally terminating the existence of an entity such as a corporation or partnership.

Withdraw

The act of formally leaving a particular status or position, such as removing oneself from a legal case or retracting a statement.

Limited Partnerships

Business arrangements where at least one partner has unlimited liability while others have liability limited to the extent of their investments.