Sales Discount

Terms - "2/10, n/30" - Maybe be offered

2/10  mean 2% discount will be given if the obligation is paid within 10 days of the invoice date, on the entire amount.

n/30 = mean that the entire obligation, Net (n), is due the seller with in 30 days of the invoice.

The sales discount is offered but the seller, but it is the buyer who exercises the option of taking the cash discount or not.

Example:

January 2, 2013, Gary Company sales on credit amounted to $5,150 of merchandise to Shehgarlynn Supermarket, terms 5/10, n/30.  On January 9, 2013, Gary's Co. received a cash from Shehgarlynn Supermarket in payment of the account last Jan. 2, 2013.
Computation:

Cost of Merchandise          $5,150.00
Discount                                      5%     
Sales Discount                         257.50

Journal Entries: Books of the Seller

January 2, 2013  Accounts Receivable        $5,150.00
                                      Sales                                                            $5,150.00
                                   To record sales on credit, amounted $5,150, terms offered 5/10, n/30


January 9, 2013  Cash                                $4,892.50
                                    Sales Discount                   257.50
                                       Accounts Receivable                    $5,150.00
                                  To record the payment of Shehgarlynn account.