Discounts taken by a buyer because of early payment are recorded on the seller's accounting records as Group of answer choices a. Purchases discount b. Sales discount c. Trade discount d. Early payment discount

B) Sales discount

Explanation:

For example, company A sells $100 in merchandise to company B on account under the following terms 2/10, n/30. The journal entry to record the initial transaction is:

Dr Accounts receivable 100

Cr Sales revenue 100

If the buyer pays within the discount period, the journal entry should be:

Dr Cash 98

Dr Sales discount 2

Cr Accounts receivable 100

Sales discount is a contra revenue account that lowers sales revenue.