Question 1

Company X sold merchandise for $50,000 with terms 3/30, n/90 on January 1. On January 29, Company X received half the payment in cash. On March 1, they received the remaining half. Prepare the journal entries to record the sale and the receipt of cash under (1) the gross method and (2) the net method.

What effect does using the gross method vs. the net method have on the companys current ratio after the sale? After the receipt of cash?