Chapter6

Chapter6 - ACG2021 Fall 2007 Yunhao Chen Notes for Chapter...

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ACG2021 Fall 2007 Yunhao Chen Notes for Chapter 6: Sales Revenue, Receivable, and Cash 1. Accounting for Sales Revenue Sales reported on I/S are net of credit card sales discount, sales discount and sale returns. Sales Revenue Less: Credit card discounts Sales discounts (a contra-revenue account) Sales returns and allowances (a contra-revenue account) Net Sales (reported on the income statement) 1.1 Credit-card sales; assume the credit card company charges 3% When sales of $1,000 are made by credit card purchases: Dr. Cash $970 Dr. Credit-card discounts 30 Cr: Sales Revenue $1,000 1.2 Sales Discounts, credit terms of 2/10, n/30 When sales of $1,000 are made: When customers pay within 10 days: Dr. Accounts Receivable $1,00 0 Dr. Cash $980 Cr. Sales Revenue $1,00 0 Dr. Sales Discount 20 Cr. Accounts Receivable $1,000 1.3 Sales Returns When sales of $1,000 are made: When returns of $150 are made: Dr. Accounts Receivable $1,00 0 Dr. Sales Returns $150 Cr. Sales Revenue $1,00 0 Cr. Accounts Receivable $150 2. Measuring and Reporting Receivables 2.1 Differences b/w Accounts Receivable and Notes Receivable 2.2 The Net Realizable Value of Accounts receivables are reported on the Balance Sheet Accounts Receivable Less: Allowance for doubtful accounts (a contra-asset account) Net Realizable Value of Accounts Receivable The “net realizable value of accounts receivable” is also called the “net book value of Chapter 6 Reporting and Interpreting Sales Revenues, Receivables and Cash 1
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ACG2021 Fall 2007 Yunhao Chen accounts receivable”. Allowance for doubtful accounts (allowance for uncollectible accounts, allowance for
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This note was uploaded on 04/07/2008 for the course ENG 2021 taught by Professor Yunhaochen during the Spring '08 term at FIU.

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Chapter6 - ACG2021 Fall 2007 Yunhao Chen Notes for Chapter...

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