- To record the sale using the net method, we calculate the net selling price after the trade discount:
Net Selling Price per unit = List Price - Trade Discount Net Selling Price per unit = $700 - (30% of $700) Net Selling Price per unit = $700 - $210 Net Selling Price per unit = $490
Total Net Selling Price for 50 units = 50 units * $490 Total Net Selling Price for 50 units = $24,500
The journal entry to record the sale would be:
借：应收账款 - L&P Heating and Cooling 24,500 贷：主营业务收入 24,500
- Assuming the payment is received on February 22, 2024, within the 10% cash discount period, the journal entry to record the receipt would be:
Net Amount to be received after 2% cash discount = $24,500 - (2% of $24,500) Net Amount to be received after cash discount = $24,500 - $490 Net Amount to be received after cash discount = $24,010
借：银行存款 24,010 贷：应收账款 - L&P Heating and Cooling 24,010
- If the payment is received on March 10, 2024, after the cash discount period, the journal entry to record the receipt would be without any discount:
借：银行存款 24,500 贷：应收账款 - L&P Heating and Cooling 24,500
In both cases, the cash discount is considered when calculating the amount received, and the full invoice amount is recorded as revenue under the net method.
