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Alfisol, Inc. offers sales discounts of 2% on all credit sales paid within 15 days. For year 1, gross credit sales totaled $150,000 and 75% of Alfisol's customers took advantage of the discount. Under the net method.
For cash receipts after the discount period, discounts not taken must be credited for $750.
Allowance for sales discounts must be credited for $2,250.
Each sale should not be recorded until payment is received and it is known whether the discount is taken.
For cash receipts within the discount period, sales discounts must be debited for $2,250.
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