Explain about purchase discounts, Accounting Basics

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Q. Explain about Purchase discounts?

Purchase discounts frequently companies purchase merchandise under credit terms that permit them to deduct a stated cash discount if they pay invoices within a specified time. Suppose that credit terms for Hanlon's May 4 purchase are 2/10, n/30. If Hanlon pays for the merchandise by May 14 the store may perhaps take a 2 percent discount. Therefore Hanlon must pay only USD 29400 to settle the USD 30000 account payable. The entry to files the payment of the invoice on May 14 is

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