[vinith1331]

What is the journal entry for an invoicegetting paid in discount?

[pready]

There are Two methods for Cash Discounts (Sales Discounts)
Example: Sales of $10,000, terms 2/10, n/30

Method 1 Gross Method
To record original sale:
Debit Accounts Receivable for 10,000
Credit Sales for 10,000

To record full pyament within discount period:
Debit Cash for 9,800
Debit Sales Discounts for 200
Credit Accounts Receivable for 10,000

To record full payment after discount period:
Debit Cash for 10,000
Credit Accounts Receivable for 10,000

Method 2 - Net Method
To record original sale:
Debit Accounts Receivable for 9,800
Credit Sales for 9,800

To record full payment within discount period:
Debit Cash for 9,800
Credit Accounts Receivable for 9,800

To record full payiment after discount period:
Debit Accounts Receivable for 200
Credit Sales Discounts Forfeited for 200

Debit Cash for 10,000
Credit Accounts Receivable for 10,000

[ricamee]

What is the journal entry for an invoicegetting paid in discount?

Meaning of journalizing

[pready]

My answers provided are the Journal Entries that will be made for each method used either from the Gross Method or the Net method.