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19 June, 08:05

On April 1, Moloney Meat Distributors sold merchandise on account to Fronke's Franks for $1,600 on Invoice 1001, terms 3/10, n/30. Payment was received in full from Fronke's Franks, less discount, on April 10. Required: Record the transactions on April 1 and April 10.

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  1. 19 June, 11:47
    0
    April 1

    Dr. Account receivable $1,600

    Cr. Sales $1,600

    April 10

    Dr. Cash $1,552

    Dr. Sales Discount $48

    Cr. Account receivable $1,600

    Explanation:

    Term 3/10, n/30 means there is a discount of 3% is available on payment of due amount within discount period of 10 days after sale and net credit period of 30 days.

    According to given data

    Sales = $1,600

    As the payment is made within discount period, so discount will be availed

    Discount = $1,600 x 3% = $48

    Payment = $1,600 - $48 = $1,552

    Discount of $48 is an expense.
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