Ch.6 Selling A Product

Ch.6 Selling A Product - Selling a Product or Service...

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Click to edit Master subtitle style 12/26/10 Selling a Product or Service Chapter 6
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12/26/10 Remember the Revenue Recognition Revenue is recognized when : 1. The earning process is substantially complete, AND
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12/26/10 Credit Sale and Recognition On January 10, XYZ Inc. sold ABC Corp. $10,000 worth of equipment (which cost XYZ $8,000) on account. What is the journal entry to record this event? Accounts Receivable $10,000 Sales Revenue $10,000 Cost of Goods Sold $8,000 Inventory $8,000 On February 1, 2009, XYZ Inc. receives ABC Corp’s payment for the equipment it purchased. What is the entry to record this event? Cash $10,000 Accounts Receivable $10,000
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12/26/10 Revenue Recognition Reductions These post-sale events will reduce the amount of revenue recognized by the firm: 1. Sales Discounts 1. Sales Returns and Allowances 1. Uncollectible Accounts CONTRA ACCOUNTS
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12/26/10 Sales Discounts Sales Discounts Reduction in selling price if payment is received within a specified period of time Often quoted as “2/10 n/30” 2% discount if paid in 10 days, full amount due in 30 days When payment is received by the seller within the discount period: ($200 Sale with 2% discount) Cash $196 Sales Discount $4 Accounts Receivable $200
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12/26/10 Sales Returns and Allowances Sales Returns Reduction in sales due to the return of, or
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This note was uploaded on 12/26/2010 for the course MGQ 201 taught by Professor Orrange during the Fall '09 term at SUNY Buffalo.

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Ch.6 Selling A Product - Selling a Product or Service...

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