Terms 2 10 N 30 Journal Entry

Hey guys i have to put these in journal entries can you see if i did them correct november 1.

Terms 2 10 n 30 journal entry. Michael co ltd. Strong company policies must be in place to ensure smooth bookkeeping. Purchased merchandise on account from toys r us for 6000 terms 2 10 n 30. Less 2 equals 4900.

Journal entry for cash discount. 2 10 net 30 is a cash discount term where customers have 30 days to pay for a purchase but can receive a two percent discount if the entire purchase paid in full within ten days. To illustrate the perpetual inventory method journal entries assume that hanlon food store made two purchases of merchandise from smith company. The percentage of cash discount is mentioned in payment terms.

If the customer waits 30 days to pay gem the june 11 entry shown above will not occur. For example 2 10 days net 30 terms or 2 10 n 30 means that a 2 discount can be taken if payment is made with 10 days otherwise the full amount is due within 30 days. The cost of the merchandise sold was 3000. For example the term 2 10.

Debit cash 4900 debit sales or service discounts 100 credit accounts receivable 5000. Terms of the sale are 2 10 n 30. If paid within 10 days of the invoice date the buyer may deduct 2 from the net amount. Received credit from toys r us for merchandise returned 500.

Courtland uses the periodic inventory system. This is the cash discount terms for a credit transaction. On may 4 hanlon purchased 30 000 of merchandise with credit terms of 2 10 n30 and shipping terms fob destination. For example the terms 2 10 n 30 means a 2 discount will be allowed if the payment is made within 10 days of the date of invoice otherwise the full amount is to be paid in 30 days.

Company a purchases 5000 in inventory from company b. 2 10 represents a 2 percent discount when payment is made to the. Within 10 days of the invoice date the customer is allowed to deduct 20 2 of 1 000 from the purchase of 1 000. Cash discount is an expense for seller and income for buyer.

Lifo vs fifo accounting vs economic income and many other matters make 2 10 n 30 accounting somewhat complicated. The journal entry or entries that courtland will make on october 1 is. What is the definition of 2 10 net 30 credit terms. On october 1 courtland company sold merchandise in the amount of 5 800 to carter company with credit terms of 2 10 n 30.

The cost of the items sold is 4 000. If the customer pays michael co ltd. Ships 1 000 of goods to a customer. November 3 sold merchandise on account for 5000 terms 1 10 n 30.

Net 30 terms are often combined with a cash discount for early settlement. In its place will be the following entry on july 1. What does 2 10 net 30 mean. Net 30 terms or n 30 means that payment in full is due 30 days after the date of the invoice.

Let s see how the credit term of 2 10 n 30 works in an example.