ACCT 217 Lecture Notes - Lecture 9: Debits And Credits, Gross Profit, Income Statement

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Two different types of shipping options xx: fob destination. If the product is resalable, then we perform the following entry . if not . we do not record anything. The use of the sales returns & allowances contra account, allows a company to track and identify the number of sales which are lost due to returns or allowances. This information is useful to management as excessive returns suggest the possibility of an inferior product, errors in billing or shipping mistakes. Two types of discounts possible: quantity discount. No additional recording necessary (sales are recorded at the invoice price, whether it is full retail price, a sale price or a volume discounts. This is a contra account to the sales or revenue account. Normal balance is a debit (opposite of the sales account) The use of the sales discounts account allows management to see what percentage of sales they are giving away in exchange for prompt payment.

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