Chapter 6 for course website

Chapter 6 for course website - Introduction To Financial...

Info iconThis preview shows pages 1–6. Sign up to view the full content.

View Full Document Right Arrow Icon
Introduction To Financial Accounting HKUST Chapter 6 Reporting and Interpreting Sales Revenue, Receivables, and Cash Slide 1 Chapter Six ACCT 101 Fall 2010 Allen Huang Introduction To Financial Accounting HKUST Learning Objective Credit Card Sales Sales Discounts Sales Returns and Allowances Reporting Net Sales Accounting for Bad Debts Slide 2 Chapter Six Methods for Estimating Bad Debts – Percentage of credit sales method (Income Statement Approach) – Aging of accounts receivable method (Balance Sheet Approach)
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Introduction To Financial Accounting HKUST Accounting for Sales Revenue The revenue principle requires that revenues be recorded when earned: Goods or services have been delivered. Amount of customer Chapter Six Payment is arranged and collection is reasonably assured. payments known. Introduction To Financial Accounting HKUST Revenue Recognition Policy 1 Slide 4 Chapter Six
Background image of page 2
Introduction To Financial Accounting HKUST Revenue Recognition Policy 2 (e) Revenue Recognition Revenue is recognized for catalog and Internet sales when merchandise is shipped to customers and at the time of sale for store sales. Shipping terms for catalog and Internet sales are FOB shipping point, and title passes to the customer at the time and place of Slide 5 Chapter Six shipment. Introduction To Financial Accounting HKUST Credit Card Sales to Consumers Companies accept credit cards for several reasons: 1. To avoid losses due to bad checks. 2. To receive payment quicker. 3. To increase sales. 4. To avoid providing credit directly to customers Slide 6 Chapter Six to customers. However, when credit card sales are made, the company must pay the credit card company a fee for the service it provides.
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Introduction To Financial Accounting HKUST Credit Card Sales to Consumers On January 2, a Deckers factory store’s credit card sales were $3,000. The credit card company charges a 3% service fee. GENERAL JOURNAL Page 34 Date Description Debit Credit Credit Card Discounts are reported as a contra revenue account. Slide 7 Chapter Six Jan. 2 Jan. 2 Cash (+A) 2,910 Credit Card Discounts (+XR, R, SE) 90 Sales Revenue (+SE) 3,000 $3,000 × 3% = $90 Credit Card Fee Introduction To Financial Accounting HKUST Sales Discounts When customers purchase on open account, they may be offered a sales discount to encourage early payment. 2/10, n/30 #ofDaysin Otherwise the Maximum Slide 8 Chapter Six Read as: “Two ten, net thirty” Discount Percentage # of Days in Discount Period Otherwise, the Full Amount is Due Maximum Days in Credit Period
Background image of page 4
Introduction To Financial Accounting HKUST On January 6, Deckers sold $1,000 of merchandise on credit with terms of 2/10, n/30. Sales Discounts to Businesses Prepare the Deckers journal entry. GENERAL JOURNAL Page 34 Date Description Debit Credit Slide 9 Chapter Six Jan. 6 Introduction To Financial Accounting HKUST On January 14, Deckers receives the appropriate payment from the customer for the January 6 sale.
Background image of page 5

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Image of page 6
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

Page1 / 26

Chapter 6 for course website - Introduction To Financial...

This preview shows document pages 1 - 6. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online