22107 Lecture Notes - Lecture 6: Accounts Receivable, Promissory Note, Income Statement
Document Summary
A receivable (cid:396)ep(cid:396)ese(cid:374)ts a (cid:272)o(cid:373)pa(cid:374)(cid:455)(cid:859)s (cid:272)lai(cid:373) o(cid:374) the assets of a(cid:374)othe(cid:396) e(cid:374)tit(cid:455). Woolworths suppliers have to wait to be paid. Sales returns and allowance: contra-revenue account (its balance is subtracted from sales account), e. g. if someone returns an item that they initially paid for on credit: Sales discount: contra-revenue account (balance is subtracted from sales account), 2/10, n/30 (2% off if paid in 10 days, no discount in 30 days). Receivables are recorded at the time of sale. In some cases a customer returns a product instead of paying for it. In that case accounts affected are sales, returns & allowances and accounts receivable where accounts receivable is recorded as a decrease. Sales, returns and allowances is a contra- revenue account, meaning that its balance is subtracted from sales when calculating a company"s net sales. In addition to returns, companies sometimes provide discounts to customers if they pay within a certain time period.
