plain why it is important for a company to keep track of how much money in discounts is given out? What account is used to track discounts? From a business owner's point of view, what are the advantages of allowing discounts? From a business owner's point of view, wha

plain why it is important for a company to keep track of how much money in discounts is given out? What account is used to track discounts? From a business owner's point of view, what are the advantages of allowing discounts? From a business owner's point of view, wha

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter6: Merchandising Transactions

Section: Chapter Questions

Problem 4MC: If a customer purchases merchandise on credit and returns the defective merchandise before payment,...

See similar textbooks

Related questions

Q: The business needs to record the trade discount in the book of account”. Question Do you agree…

A: Discount means the amount which is not required to be paid or received. Discount is deducted to find…

Q: CASE SUMMARY: Retailers commonly track customer's shopping patterns and target them with special…

A: Now it becomes a trend to track the customer's shopping pattern behavior. So that the company can…

Q: Some business transactions purchase goods and services from the seller, on credit. The buyer of…

A: Purchase of Merchandise on Account - Purchases on Accounts means Inventory purchase without paying…

Q: The cash discount also known as purchase discount or sale discount is given to customers for: a.…

A: The cash discount, often known as purchase discount or sale discount, is a type of discount.

Q: Is granting credit to customers good? And as a future business owner how would you handle or manage…

A: Explanation to Credit When products are sold to customers on credit and customers agree to pay the…

Q: Sales Returns and Sales Allowances. What are Sales Discounts? What are their respective normal…

Q: Effective credit management involves establishing credit standards for extending credit to…

A: a) How a company handles its credit accounts, including methods of invoicing and collecting past-due…

Q: Larry's Landscaping Services has extended Net 30 terms to his new customer, Mahoney's Mugs. What…

A: Invoice is a document that proves the transaction between a buyer and a seller. It specifies the…

Q: Which of the following is an advantage of using the net price method for recording cash discounts on…

A: At the time of recording credit sales, there can be some provision for discount to be given. So,…

Q: Which one of the following best defines the term credit scoring? A. Categorizing customers…

A: The statistical tool used to analyze the performance by lenders and financial institutions so as to…

Q: Question The average collection period is the average amount of time that elapses from a credit…

A: Average Collection Period Average collection period is time allowed by the company to its debtors…

Q: what is the average amount of receivables؟ 2-what is the percentage cost of trade credit to…

A: 1) Hence, the average amount of receivables is $70,000.

Q: separate account for sales returns and allowances useful to management? If you owned a…

Q: If you are the seller will you provide discount for customers? Why or why not? What type of discount…

A: solution concept In the trade transaction ,the practice of giving and taking…

Q: Thinking about various payment terms for Accounts Payable, do you feel it is always valuable for a…

A: The prime rate means the lowest borrowing rate of money.

Q: What would a credit manager do if a sales order received caused a customer to exceed its credit…

A: When orders are received from new customers, the system automatically accesses the credit rating…

Q: Explain the trade credit facility provided by some companies to their customers that allow them to…

A: Trade credit Trade credit is a cash discount given to customer by seller to make early payments.…

Q: How much is the purchase discounts? How much is input tax on purchases? How much is input tax to be…

A: Input tax is the amount of tax which a business pays it to the vendors on the purchasing of the…

Q: how can using a mix of Accounts Receivable, Notes Receivable and accepting Credit Cards can benefit…

A: Answer: Accounts receivables, notes receivables and accepting credit cards are three different modes…

Q: A customer pays on credit for $1,250 worth of merchandise, terms 4/15, n/30. If the customer pays…

Q: when a buyer returns merchandise purchased for cash, the buyer will record the transaction as a…

A: The purchase return in the books of the buyer under the perpetual inventory is to debit the accounts…

Q: What are some benefits to a business in accepting credit cards and debit cards?

A: Debit card: Debit card is an electronic card, which allows the debit card holders to pay cash…

Q: Please tell us about Sales Discounts. Why are they necessary? Does this account appear on the…

A: Discount is the amount of reduction in the value of sale or purchase. In other words, discount in…

Q: If merchandise purchased on account is returned, the buyer can inform the seller of the details by…

A: An invoice refers to a bill that is issued by a seller to the buyer. It specifies details related to…

Q: Which of the following accounts is used in merchandising but not in service type of business?…

A: Service company deals with the intangible product whereas merchandise company buys tangible product…

Q: the discount that is being acquired

A: First option is wrong because the cash discount is the discount given by the seller to the buyer for…

Q: Why do businesses often offer "Sales Discounts" to their customers?

A: Sales Discounts - Sales Discounts are the discounts given by the company to the customers. This…

Q: Why do you think businesses extend credit to customers thereby creating accounts receivable?

A: Account receivable means where goods has been sold on credit and amount has not been received.…

Q: To intensify the collection of receivables, Kate's Trading offered 2/10, n/30 to customers. What…

A: The discount is the benefits given by reduction in the amount to be paid.

Q: Making sales using credit cards is a way a company can dispose its receivables. O True O False

A: Credit Card Sales are those sales wherein the amount is received directly by the vendor on the date…

Q: What is the difference between online sales and cash sales? 2- If you are a business owner,…

A: We’ll answer the first question since the exact one wasn’t specified. Please submit a new question…

Q: When a company decides to extend credit to consumers, it is making an investment decision in: a.…

A: A company often decides to extend credit to consumers. The decision is made on the logic that credit…

Q: If a customer purchases merchandise on credit and returns the defective merchandise beforepayment,…

A: When customer made purchases on credit from the business, then one side it will generate accounts…

Q: A cash discount on purchases should be debited to ______________ Select one: A. a revenue account…

A: The answer is provided as follows:

Q: Effective credit management involves establishing credit standards for extending credit to…

A: Company provide credit to customers and discount to customers to increase sales.

Q: When a seller receives payment from a customer who takes the discount for paying early, the journal…

A: When a seller receives payment within discount period, cash account will be debited with accounts…

Q: If NetSolutions sells a customer some products on account (accounts receivable) and offers a…

A: A discount refers to amount deducted from the normal selling price.

Q: Effective credit management involves establishing credit standards for extending credit to…

A: Accounts receivable: When the seller sold the goods to the buyer on a credit basis of the specified…

Q: Credit card companies may charge which of the following? (select all that apply) cash advance fee…

A: While Credit Card are an incredible resource, they frequently accompany various expenses that can…

Q: Explain in detail different types of documentation that the business would expect to change hands in…

A: We’ll answer the first question since the exact one wasn’t specified. Please submit a new question…

Q: Which of the following would not result in a reduction of the amount invoiced to a customer when a…

A: The discount decreases the amount of payment to be paid to creditors or to be received from…

Concept explainers

Bookkeeping

Bookkeeping is the process of recording the financial transactions of a company on a regular basis. With the process of bookkeeping, companies can track important financial information that helps management in making crucial decisions.

Question

This module discusses discounts given out to customers based on payment terms, such as 2/10, n/30. :

What would the credit terms 3/15, n/45 stand for?
Explain why it is important for a company to keep track of how much money in discounts is given out? What account is used to track discounts?
From a business owner's point of view, what are the advantages of allowing discounts?
From a business owner's point of view, what are the disadvantages of allowing discounts?

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1

Step 2

Step 3

Step 4

Trending now

This is a popular solution!

Step by step

Solved in 4 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

Conduct research on a real-world retailers trade discounts and policies, and discuss the following questions. Which company did you choose? What do they sell? What is a trade discount? What products are subject to a trade discount? Describe the discount terms/program in detail. Give examples. Are there any restrictions? What incentive does this company have to give a trade discount? How does this discount benefit the buyer? If the buyer had to choose between receiving a trade discount or regular cash purchase discount, which would benefit them more? Why?
If a customer purchases merchandise on credit and returns the defective merchandise before payment, what accounts would recognize this transaction? A. sales discount, cash B. sales returns and allowances, cash C. accounts receivable, sales discount D. accounts receivable, sales returns and allowances
For each of the following statements, fill in the blanks with the correct account names. A. A retailer purchases merchandise on credit. The retailer would recognize this transaction by debiting _____ and crediting _______. B. A retailer pays for purchased merchandise within the discount window. The retailer would recognize this transaction by debiting ________ and crediting _________ and ________. C. A customer returns merchandise to the retailer and receives a full refund. The retailer would recognize this transaction by debiting _________ and crediting _________ if the customer had not yet paid on their account. D. A customer pays for purchased merchandise within the discount window. The retailer would recognize this transaction by debiting ________ and _______, and crediting _________.
A customer returns $690 worth of merchandise and receives a full refund. What accounts recognize this sales return, assuming the customer has not yet remitted payment to the retailer? A. accounts receivable, sales returns and allowances B. accounts receivable, cash C. sales returns and allowances, purchases D. sales discounts, cost of goods sold
What accounts are used to recognize a retailers purchase from a manufacturer on credit? A. accounts receivable, merchandise inventory B. accounts payable, merchandise inventory C. accounts payable, cash D. sales, accounts receivable
a) Explain in detail different types of documentation that the business would expect to change hands in purchase, sales, purchase returns and sales returns etc. b) Show the model of atleast one Credit Sales invoice, Purchase invoice, Debit note and Credit note. (you can use imaginary figure) c) What are policies for trade discount/cash discount, Is there any products are subject to trade discount and why? Explain the terms and conditions in detail.
“The business needs to record the trade discount in the book of account”. Question Do you agree with the above statement? Justify your answer.
If NetSolutions sells a customer some products on account (accounts receivable) and offers a discount for early payment of the customers accounts receivable within the credit period, the discount is called a _________________________________. Group of answer choices trade discount purchases discount sales discount sales allowance
If you are the seller will you provide discount for customers? Why or why not? What type of discount will you provide for your customers? How will you account for this discount? Answer this by giving a sample problem including the debit and credit entries. If you are the buyer, will you get discounts for your suppliers? Why or why not?
Kate Trading made an early payment to its suppliers to take advantage of the discount offered by the supplier. What account is most likely used for the discount that is being acquired by Kate Trading? cash discount trade discount sales discount purchase discount
Effective credit management involves establishing credit standards for extending credit to customers, determining the company’s terms of credit, and setting up procedures for invoicing and collecting past-due accounts. The following statement refers to a credit management policy. Select the best term to complete the sentence. The conditions of the credit sale, including cash discounts and due dates, are indicated by the company’s (______) . Consider the case of Newtown Co.: Newtown Co.’s CFO has decided to take a closer look at the company’s credit policy. Newtown Co. has annual sales of $402.8 million, and it currently has an accounts receivable balance of $47.6 million. The first step in analyzing the firm’s credit policy is to determine its days sales outstanding (DSO). Based on this information, Newtown Co.’s DSO is (_____) . (Note: Use 365 days as the length of a year in all calculations. Do not round intermediate calculations. Round your answer to one…
What is the primary reason why most businesses want to sell on a credit basis if it is preferable for sellers to collect advance payments from customers and/or accept cash transactions only? Give and explain a credit/collection-related task of (a) credit manager and (b) collections manager.