文档介绍：Cash and Receivables
2-2
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Accounts Receivable
Result from the credit sales of goods or services to customers.
Are classified as current assets.
Are of trade discounts.
To give quantity discounts to large customers
Net of trade discounts
a manufacturer might list a machine part at $2,500 but sell it to a customer a 10% discount.
The trade discount of $250 is not recognized directly when recording the transaction.
The discount is recognized indirectly by recording the sale at of discount price of $2,250, not at the list price.
Trade discount is recognized indirectly, why? How to recognize in pany account book?
Cash discounts
Cash Discounts
2/10,n/30
Number of days discount is available
Otherwise, net (or all) is due
Credit period
Discount percent
Cash Discounts
Opportunity cost for Cash discount
If interest rate of loan is 18%, a pany provides credit policy is 2/10,n/30, this credit policy is useful ,or not? Why ?
Work in group(10 minutes for discussion)
Cash Discounts
Sales are recorded at the invoice amounts.
Sales discounts are recorded as reduction of revenue if payment is received within the discount period.
Gross Method
Sales are recorded at the invoice amount less the discount.
Sales discounts forfeited are recorded as interest revenue if payment is received after the discount period.
Net Method
Sales Discounts
Alternative Methods of Accounting for Sales Discounts
Gross Price Method
Net Price Method
Sold $7,000 of merchandise to various customers on December 4, 2009 with terms of 2/10, n/30
Accounts Receivable 7,000
Sales 7,000
Accounts Receivable 6,860
Sales 6,860
$7,000 - ($7,000 x )
Sales Discounts
Alternative Methods of Accounting for Sales Discounts
Gross Price Method
Net Price Method
On December 13 received payment on goods at $5,500.
Cash 5,390
Sales Discount 110
Accts. Receivable 5,500
Cash 5,390
Accts. Receivable 5,390
$5,500 - ($5,500 x )
Sales Discounts
Alternative Methods of Accounting