BetterBuy Sells $50,000 of TVs to a Customer

question 88

Multiple Choice

BetterBuy sells $50,000 of TVs to a customer.The terms include a 2% discount if paid in 7 days and a 1% discount if paid in 8-14 days.BetterBuy receives the money in 12 days.How would the transaction be recorded by BetterBuy?

• A)Debit Inventory for $500 and credit Accounts Payable for $500.
• B)Debit Cash for $49,500,credit Accounts receivable for $50,000,and debit sales discounts for $500.
• C)Debit Accounts receivable for $50,000,credit Cash for $49,500,and credit sales discounts for $500.
• D)Debit Accounts Payable for $500 and credit Inventory for $500.
• E)The discount would be $500 (.01*50,000).The customer would pay $49,500 in cash.The discount is debited to Sales Discount and Account Receivable is credited for $50,000 (the original amount of the sale).