BU127 Lecture Notes - Lecture 10: Effective Interest Rate, Accounts Receivable, Bank Reconciliation
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BU127 Full Course Notes
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Service companies typically recognize sales revenue when they have provided services to the buyer - The appropriate amount of revenue to recognize is the cash-equivalent sales price. Companies accept credit cards to: o increase sales o avoid providing credit directly to consumers o. Record the amount received o debit the cash less the transaction fee (+a) o debit the credit card. Discounts (+xr or +e, -se) o credit the sales revenue (+r, +se) - record the change in inventory o debit the cost of sales (+e) o credit the inventory (-a) 30 = maximum days in credit period o you get a 2% discount if you pay within 10 days, 10 = number of days in discount period n = net (total sales less. Assume that customer does not take the discount first o debit accounts receivable (+a) o credit sales.
