Net Revenues
What are the four net revenues?
Trade discounts, Sales return, Sales allowances, Sales discounts
What does 3/10, n/30 mean?
If the customer pays what they owe on account in 10 days, they will get 3% off. But there will be no discount if the customer pays within the 30 days but past the 10 days.
The Allowance for Uncollectible Accounts increases on what side?
Credit
Welding lends Iron Co. $10,000 on June 1, accepting a 5 month, 9% interest note. On Nov. 1, the maturity date, how would you record the entry for notes receivable? (debit or credit? For how much?)
Credit Notes Receivable for 10,000
What is a trade discount?
reduction in list price of a product or service
March 2, F.Y.Eye sells sunglasses to a customer for $200 on account but the customer, no longer wanting the sunglesses, returns them on March 4.
Debit Sales Returns 200
Credit Accounts Receivable 200
What type of account is the Allowance for Uncollectible Accounts?
Contra Asset
What does it mean to honor a notes receivable?
paid in full at its maturity
What is a sales return?
Customer returns goods previously purchased
F.Y.Eye typically provides laser eye surgery for $3,000 but, in March, offers the service for only $2,400. Record the two accounts.
Debit Accounts Receivable 2400
Credit Service Revenue 2400
How do you record a write-off?
Debit Allowance for Uncollectible Accounts
Credit Accounts Receivable
What is the formula for computing interest on a note?
Face amount of note x annual interest rate x time in terms of 1 year = interest
What is a Sales Allowance?
Customer does NOT return goods
The customer is not satisfied with the laser eye surgery on March 1 for $2,400. F.Y.Eye allows a $400 reduction in the amount owed by the customer on March 5.
Credit Accounts Receivable 400
When reversing a write-off, what happens to the Allowance for Uncollectible Account?
A customer pays what was written off - we are not focused on the cash.
Debit Accounts Receivable
Credit Allowance for Uncollectible Accounts
Welding Inc. lends Iron Co. $8,000 on June 1, accepting 5 month, 9% interest note. Welding's financial statements are annually prepared on Dec. 31. Nov. 1, the maturity date, Welding's entry for interest revenue is?
Cash 8300
Notes Receivable 8000
Interest Revenue 300 (8000 * .09 * 300 )
What is a Sales Discount?
Cash is collected from the customer on March 10, which is w/in the 10-day period. (Original sale: $2400, Sales Allowance: $400, 2/10,n/30)
Cash 1,960
Sales discounts 40
Accounts Receivable 2000
What is another term for the Allowance for Uncollectible Accounts?
The Allowance for Doubtful Accounts
What is the term "cash realizable value" sometimes referred to as?
accounts receivable