principle to determine the accepted time to record sales revenue for typical retailers‚ wholesalers‚ manufacturers and service companies. To understand the recording and management implications of credit sales‚ including the offering of sales discounts and the estimation of doubtful debts To estimate‚ report and evaluate the effects of uncollectable accounts receivable (bad debts) on the financial statements. To record Doubtful Debts applying the Percentage of Sales and Aged Methods.
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Returns and Allowances Merchandise Inventory Accounts Receivable Cost of Sales Return of merchandise xxx xx xxx xxx Merchandise Inventory Cash Freight on purchases Freight-Out Cash Freight on sales xxx xxx xxx xxx Loss due to Inventory Shortage Merchandise Inventory Inventory Shortage (correcting entry) Accounts Payable xxx xxx Purchase Returns and Allowances xxx Return of merchandise Accounts Receivable xxx Sales Sale of merchandise on account Sales Returns and Allowances Accounts Receivable
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a 10% discount will be given; if not paid within two days‚ the full invoice price will be due in thirty days. True or False Answer: The "2/10" means that a 2% discount is given if the payment is made within 10 days. 2) Flyer Company has provided the following information: Cash sales‚ $150‚000 Credit sales‚ $450‚000 Selling and administrative expenses‚ $110‚000 Sales returns and allowances‚ $30‚000 Gross profit‚ $490‚000 Accounts receivable‚ $110‚000 Sales discounts‚ $14‚000
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represent the amount of cash owed to the company by its customers from the sale of products or services on account. True False 5. Trade discounts represent a discount offered to the purchasers for quick payment. True False 6. When a company sells a $100 service with a 20% trade discount‚ $80 of revenue is recognized. True False 7. A sales discount represents a reduction‚ not in the selling price of a product or service‚ but in the amount to be paid by a credit customer if payment is
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o GROSS PROFIT – Sales – COMS INCOME STATEMENT Gem City Music Income Statement For the Year Ended December 31‚ 20— Revenue from sales: Sales $189‚300 Less: Sales returns and allowances $ 1‚700 Sales discounts 500 2‚200 Net sales $187‚100 Cost of merchandise sold XXXX 100‚000 Gross profit $ 87‚100 Operating expenses: Selling expenses: Sales salaries expense $17‚700 Administrative
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return. “Internal rate of return (IRR) is the discount rate that gives the project a zero NPV” (McLaney‚ 2006). It is a good choice to use for investment projects. There is a formula for the internal rate of return: (A is the lower discount rate and B is the higher rate‚ a is the NPV at the lower rate and b is the NPV at the higher rate.) For example the Net Present Value (NPV) is 88 when the discount rate is 20%‚ and the NPV is 12 when the discount rate is 30%. Therefore the IRR in this situation
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plan that will grow revenues‚ increase gross profit margin‚ determine who controls market development funds (MDF’s) and have both the VP of Sales and the VP of Marketing agree and buy in? Decision Factors: 1. Follow VP of Marketing a. Reduce trade discounts and help pay for marketing controlled “consumer oriented” MDF b. Shift to consumer-oriented MDF would generate an additional increase in retail sales of 5% and an increase in gross profit margin to 38% c. Additional consumer-targeted marketing programs
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Sales 9. 59‚000 2‚500 Sales Accounts Receivable – H 10‚000 / 200 x (200 – 150) = 2‚500 180‚000 Accounts Receivable – I 10. 180‚000 Inventory 120‚000 Cost of Sales 11. 2‚500 120‚000 Sales Returns and Allowances Sales 5‚000 5‚000 Problem 3 (Blooms Company) Account 1 2 3 4 5 6 Total Per client 12‚000 22‚000 97‚600 20‚000 55‚000 7‚500 215‚300 Adjustment Per audit (98‚800) (98‚800) Age Classification Not due 1-60
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CHAPTER 5 Merchandising Operations ASSIGNMENT CLASSIFICATION TABLE | | | | |Brief | | | |A | |B | |Study Objectives | |Questions | |Exercises | |Exercises | |Problems | |Problems | | | | | | | | | |
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on credit terms of 2/10‚n/30. Some of all the goods are damaged in shipment‚ so Kmart returns $18530 of the goods to MegoBlock. All amounts are inclusive of GST. a. after the discount period cost = 185800 returns = 18530 owing = 167270 Outside Discount = $167270 b. within the discount period = $163925 = 98% x 167270 FOB – free on board FOB Delivery Point – means the buyer takes ownership (title) to the goods at the delivery point FOB Destinations – means the
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