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Let’s take the same example sale with the same credit terms, but now assume the customer paid their account on August 25. Sales Discounts will reduce Sales at the end of the period to produce net sales. Sales Discounts increases (debit) for the amount of the discount ($16,800 × 2%), and Accounts Receivable decreases (credit) for the original amount owed, before discount. Cash increases (debit) for the amount paid to CBS, less the discount.

Since the customer paid on August 10, they made the 10-day window and received a discount of 2%. On August 10, the customer pays their account in full. In the second entry, COGS increases (debit) and Merchandise Inventory–Tablet Computers decreases (credit) in the amount of $3,360 (56 × $60). These credit terms include a discount opportunity (2/10), meaning the customer has 10 days from the invoice date to pay on their account to receive a 2% discount on their purchase. These credit terms are a little different than the earlier example. In the first entry, both Accounts Receivable (debit) and Sales (credit) increase by $16,800 ($300 × 56). The payment terms are 2/10, n/30, and the invoice is dated August 1. On August 1, a customer purchases 56 tablet computers on credit. Sales Discount Transaction Journal Entries

No discount was offered with this transaction thus the full payment of $15,000 occurs. The credit terms were n/15, which is net due in 15 days. The following entry occurs.Īccounts Receivable decreases (credit) and Cash increases (debit) for the full amount owed. On July 17, the customer makes full payment on the amount due from the July 7 sale. In the second entry, Merchandise Inventory-Desktop Computers decreases (credit), and COGS increases (debit) for the cost of the computers, $8,000 ($400 × 20).

Since the computers were purchased on credit by the customer, Accounts Receivable increases (debit) and Sales increases (credit) for the selling price of the computers, $15,000 ($750 × 20). The credit terms are n/15 with an invoice date of July 7. On July 7, CBS sells 20 desktop computers to a customer on credit. COGS increases (debit) and Merchandise Inventory-Packages decreases (credit) for the cost of the packages, $6,200 ($620 × 10). In the second entry, the cost of the sale is recognized. In the first entry, Cash increases (debit) and Sales increases (credit) for the selling price of the packages, $12,000 ($1,200 × 10). On July 1, CBS sells 10 electronic hardware packages to a customer at a sales price of $1,200 each. Cash and Credit Sales Transaction Journal Entries After placing order we'll send You download instructions on Your email address. It's a complete owner's manual ( also known as operating manual or user guide), and it's in PDF format. All manuals are FULL service manuals or owner's manuals.