Assume Centennial Co. sold merchandise to Sawmill Industries for $20,000, with credit terms of 2/10, n/30. Sawmill pays in full, but does not take the discount. Using the net method of recording sales discounts, the entry to record the payment would include a

1. credit to Accounts Receivable-Sawmill Industries for $20,000.
2. credit to Sales for $19,600.
3. credit to Accounts Receivable-Sawmill Industries for $19,600.
4. credit to Sales Discounts for $400.