Accounting,

Accounts receivable from sales to customers are

trade receivables

Credit Sales

transfer of products and services to a customer today while bearing the risk of collecting payment from that customer in the future. AKA Sales on Account or Services on Account.

The list price in Boytons catalog indicates that Product A sells for $3000, with a trade discount of %5. Boyton sells the goods to a customer who qualifies for the trade discount. At what amount should Boyton record the sale and related account receivable?

$2850

James Corp. sells $1000 goods on account. Sales returns were $40, and sales allowances were $50. Sales discounts for the period were $30. Net sales are

$880

Pine Corp. provides $1000 of services on account with term 2/10, n/30. If the customer takes the discount and pays within 10 days, Pine will receive

$980

Relay Corp. provides services with a normal price of $105000 and a trade discount of $5000. Terms are 1/10, n/30 and the customers pay within 10 days. the net service revenue is

$99000 105000-5000 trade discount = 100000 gross sales less 1% discount (.01x100000) = 99000

Gammy Corp provides services with a normal price of $800,000 and a trade discount of $100000. Terms are 2/10, n/30 and the customers pay within 10 days. The net service revenue is

-686000 800000-100000 trade discount=700000 gross sales less 2% discount (.02x700000)=686000

Identify the likely disadvantages of extending credit to customers.

-accounts that are un-collectible -delays in collecting accounts

York Inc. records a year-end adjustment for estimated sales returns and allowances. As a result of this entry, Yorks finacial statements will changes as follows

-assets decrease -equity decreases

Sellers offer discounts to buyers primarily to

-attract new customers -encourage quick payments -reward customer loyalty

Claire provides $100 of services to customers on account with terms 2/10, n/30. The Service revenue Account is credited for $100. If the customer pays within 10 day, Claire will record which of the following?

-credit Accounts Receivable $100 -debit Sales Discount $2 -debit Cash $98

credit sales typically include an informal credit arrangement requiring payment within

30-60 days

Glasser Corp. provided $20000 of services on account. The account that should be debited is

Accounts Receivable

The legal right to receive cash is valuable and represents an asset of the company.

Accounts Receivable

Sales Return and Allowances is an

Contra-Revenue Account and requires a Debit entry to increase the account.

Bell provides $500 of services to customers on account with terms 3/10, n/30. The Service Revenue account is credited for $500. If the customer pays within 10 days, Bell will record which of the following?

Debit Sales Discount $15

Warner Corp. sells goods on account for $10000 on April 2. On April 20, the customer returns $3000 of the merchandise. The customer has not yet paid for any of the goods. What is the entry Warner will make on April 20 when the goods are returned?

Debit Sales Returns; credit Accounts Receivable

Zeiger Corp sells goods to a custome on account for $2000, terms 2/10, n/30. When the customer pays on the 12th day, Zeiger records which of the following?

Debit cash $2000 the customer must pay the full amount if paid after 10 days

when merchandise is returned for a refund or for credit to be applied to other purchases, the situation is called an

Sales return

Glasser Corp. provided $20000 of services on account. The account that should be credited is

Service Revenue

Net Revenues

Total revenues less discounts, returns, and allowances are refereed to as

Sales Discount

a cash discount representing a reduction in the amount to be paid by a credit customer if the customers pay within a specified period of time.

Receivable

a claim to receive cash in the future is a

Sales Allowance

a customer receives a partial refund of the sales price after the customer discovers a flaw in the merchandise. The customer keeps the merchandise.

Sales Return

a customer returns merchandise purchased during the month and receives a refund of the full sales price.

Trade Discount

a percentage reduction from list price.

Recording sales returns and allowances in a seperate contra-revenue account helps managers

analyze the transactions

a sale to a customer on account should only be recognized when the goods or services are delivered and

collection of the receivable is probable.

the sales discount account is classified as a

contra revenue account

at the end of the year, companies must record estimated contra revenue for estimated sales returns and allowances and sales discounts pertaining to

current year sales only

at the the end of the year, companies must record estimated contra revenue for estimated sales returns and allowances and sales discounts pertaining to

current year sales only

Abby Fashions sells a suit to a customer for $600. The day after the sale, the customer discovers that the jacket has a small stain on the back. Abby Fashions grants the customer a $60 credit. Abby Fashion will record a

debit to Sales Allowances $60

trade receivable

is another term for accounts receivable

Income tax receivable is a

nontrade receivable

Nontrade receivables

receivables that originate from sources other than customers. -tax refund claims -interest receivable -loans by the company to other entities including stockholders and employees.

which of the following is a discount that is a reduction in the sales price if the customer pays within a specified time period?

sales discount

Accounts Receivable

the amount of cash owed tot the company by its customers from the sale of products or services on account.

Credit Sales

when a business sells goods to a customer, and the customer promises to pay later, this is referred to as

Notes Receivable

when receivables are accompanied by formal credit arrangements made with written debt instruments (or notes).

PAredes records sales at the gross amount and uses a sales discount account to account for the discounts taken by customers. Paredes provides services on account for $1000 with terms 2/10, n/30. The entry to record this transaction will include

-credit to Service Revenue, $1000

identify the likely disadvantages of extending credit to customers.

-delays in collecting accounts -accounts that are uncollectible

sale revenue is reported net of these accounts

-estimated sales returns and allowances pertaining to current year sales -actual sales discounts taken by customers -actual sales returns and allowances granted to customers

the financial statement effects of recording an allowance for estimated sales returns are that:

-income decreases -equity decreases -assets decrease

Which of the following are classified as receivables?

-loans by a company to other entities -interest due from loans to customers

if sales returns are incorrectly treated as expenses, what are the effects on the financial statements?

-revenues are overstated -expenses are overstated

the two conditions that must exist for a sale and the related receivable to be recognized are

-the company has provided goods or services to the customer -collection from the customer is probable.