MGRL-1200 Lecture Notes - Lecture 5: Income Statement, Earnings Before Interest And Taxes, American Express

• School: Vanderbilt University
• Department: Managerial Studies
• Course: MGRL-1200
• Professor: Trentham Brent

Document Summary

Revenue recognition was examined in chapter 3, but p. 238 is worth a read to see how this is an issue with some companies & industries. Inventory (to record the sale and the asset that revenue generated. You also have to reduce the inventory balance at cost and record the related expense) Sales discounts (credit terms to encourage early payment): 2/10, n/30 - a 2% discount is offered is payment is made within 10 days, the full amount (net) is due within thirty days. n/30 - no discount, the full amount is due within thirty days. 300 (record the sale for of inventory w/ a cost of ; credit terms 2/10, n/30) 10 (to record the cash collection within the discount period) Note that sales discounts is a contra revenue which is reported as a separate line item on the income statement as a reduction in sales revenues.