Cash Discounts and Gross Method

Cash discounts are reductions for credit customers to incentivize quick payments, for instance, 2/10, n/30. A Gross Method accounting will:

• Debit Accounts Receivables for the full amount
• Credit Sales Revenue for the full amount

 
And once the payment comes it will:  

• Debit Cash net of Sales Discount
• Debit Sales Discount
• Credit Accounts Receivables

 
After recording all the transactions, you will have: Sales – Sales Discounts = Net Sales Revenue