A Company Uses the Gross Method to Account for Cash

Multiple Choice

A company uses the gross method to account for cash discounts offered to its customers. If payment is made before the discount period expires, which of the following is correct?

A) Sales discounts is debited for the amount of discounts taken by customers.
B) Sales discounts is credited for the amount of discounts taken by customers.
C) Accounts receivable is debited for the gross amount of cash received from customers.
D) Accounts receivable is credited for the net amount of cash received from customers.