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Sales, Returns/Discounts/Allowances, Direct Write-off

by: George Maxwell Miller

Sales, Returns/Discounts/Allowances, Direct Write-off ACCT 201

Marketplace > University of Louisville > Accounting > ACCT 201 > Sales Returns Discounts Allowances Direct Write off
George Maxwell Miller
U of L
GPA 3.7
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About this Document

This consists of everything you need to know about the basics of Sales, Returns/Discounts/Allowances, and Direct Write-off.
Intro to Accounting 1
Class Notes
sales, Returns/Discounts/Allowances, Direct Write-off, ACCT, Accounting, basic




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This 2 page Class Notes was uploaded by George Maxwell Miller on Wednesday March 9, 2016. The Class Notes belongs to ACCT 201 at University of Louisville taught by Johnston in Spring 2016. Since its upload, it has received 10 views. For similar materials see Intro to Accounting 1 in Accounting at University of Louisville.

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Date Created: 03/09/16
Sales, Returns/Discounts/Allowances, Direct Write-of 03/09/2016 ▯ Sales+discounts+returns and allowances= Net sales ▯ ▯ Net sales – Cost of goods sold = gross profit ▯ ▯ Sales of Merchandise  Each sale transaction involves revenue and cost ▯ ▯ Zmart sold $2400 of merchandise on credit and the cost of that inventory was $1200 ▯ ▯ Sales returns and allowances  Usually involves dissatisfied customers and possibility of lost future sales  Sale allowance refers to reduction in the selling price  Return is when the customer return the product o This reduces revenue by debiting allowances and crediting accounts receivable ▯ ▯ Accounts receivable ▯  Sales on Credit=Debit to accounts receivable/credits sales ▯  Crdit card sales=credit cards increase purchases o Advantages are as follows:  Sales increase by providing purchase options to the customer  Cash collections are quicker  Customers credit is evaluated by the credit card issuer  The risks of extending credit are transferred to the credit card issuer ▯ ▯ ▯ Credit card sales ▯  Installment Accounts receivables: o Amounts owed by customers from credit sales for which payment is required in periodic…… ▯ ▯ ▯ 07-P1: Valuing accounts receivable ▯  Two methods for accounting bad debts: o 1) Direct write of method (not in align with GAP. Only used for tax purposes) o 2) Allowance method (method you’ll have to use) ▯ ▯ Direct write-of  EXAMPLE: TechCom determines on jan 23 that it cannot collect rd $520 owed to it by its customer… o Bad Debts expense………. Dr. 520 o Account receivable………… Cr. 520 ▯ ▯ ▯ What happens if a customer comes back and makes payment? ▯  Reverse what you previously did: o Cash………………dr. 520 o Accounts receivable-Kent………….cr. 520 ▯ ▯ ▯


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