On November 10 of the current year, Cherokee Industries sold materials to a customer for $8,000 with credit terms 2/10, n/30. Cherokee uses the net method of accounting for sales discounts. What entry would Cherokee make on November 17, assuming the correct payment was received on that date

DR Cash                                                              $7,840

     CR Accounts Receivable                                              $7,840

Explanation:

When a company uses the Net method of accounting for sales discounts, it will directly account for the discount from the Accounts Receivable account without the use of a Sales Discount account.

A credit term of 2/10, n/30 means that if the customer pays their balance in 10 days they will get a 2% discount otherwise they should pay within 30 days.

Payment was made within discount period so discount applies;

= 8,000 * ( 1 - 2%)

= $7,840

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