Sansomite Co. distributes suitcases to retail stores and extends credit terms of 1/10, n/30 to all of its customers. At the end of June, Sansomite's inventory consisted of suitcases costing $1,200
During the month of July the following merchandising transactions occurred:

July 1 Purchased suitcases on account for $1,800 from Trunk Manufacturers, FOB destination, terms 2/10, n/30. The appropriate party also made a cash payment of $100 for freight on this date.

July 3 Sold suitcases on account to Satchel World for $2,000 The cost of suitcases sold is
$1,200

July 9 Paid Trunk Manufacturers in full.

July 12 Received payment in full from Satchel World.


How do I post July 12 Transaction?

The Jul 3 transaction will be:
Debit Accounts Receivable for the amount and Credit Sales Revenue for the amount: Debit COGS for the amount of inventory sold and Credit Merchandise Invenotry for the amount of inventory sold.

For Jul 12 you need to know what the journal entry was for the sale on Jul 3. The juournal entry for the sale was Debit Accounts Reveivable and Credit Sales Revenue. You are receiving cash from your customer and you know the original journal entry so you can now record the collection of cash. The journal entry to record the receipt of cash from a customer is: Debit Cash for the amount of cash received and Credit Accounts Receivable for the amount. The amount of cash received is what the customer owes you.

Pready, you are correct to some extent, but the customer has paid within stipulated 10 day period has earned a discount of 1%, hence the amount received should be $1,980 and $20 being discount allowed.

I think, the confusing part in the question is "Received payment in full from Satchel World." This will tempt the students to record full amount of invoice value, which would be incorrect.