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Unformatted text preview: ES, NET Contra accounts Gross sales Net sales • Sales returns
- Products returned by customers. • Sales allowances
- Post-sale adjustments to the original price. Sales allowances
Hoosier Company sold $100,000 worth of
merchandise on credit this quarter. Customers asked
for sales allowances equal to 10% of the total sold.
• Help Hoosier Company record these events. Gross sales Net sales Hoosier GROSS SALES
Less: Sales allowance NET SALES 100,000
90,000 Sales returns
Spartan Company sold $200,000 worth of merchandise
on credit this quarter. Customers returned $14,000 of
the merchandise sold.
• Help Spartan Company record these events. Gross sales Net sales Spartan GROSS SALES 200,000
186,000 Less: Sales returns NET SALES Income Statement (in thousands) Year Ended December 31,
2011 Net revenues 2010 2009 $1,472,684 $1,063,927 $856,411 Net revenues consist of both net sales and license revenues.
Net sales are recognized upon transfer of ownership...Net
sales are recorded net of sales discounts...along
with...returns, if applicable... Accounts receivable
• Accounts receivable exists because of credit sales. We
report accounts receivable at its “net realizable value,”
which is the amount of cash the firm expects to collect.
• Two methods for dealing with uncollectible accounts:
- Specific write-off method (rare) - Allowance method (common...required if poss...
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This document was uploaded on 02/17/2014 for the course ACCTG 215 at University of Washington.
- Spring '08