College Accounting, Chapters 1-27
23rd Edition
ISBN: 9781337794756
Author: HEINTZ, James A.
Publisher: Cengage Learning,
expand_more
expand_more
format_list_bulleted
Question
Chapter 10, Problem 1TF
To determine
Indicate whether the given statement is true or false.
Expert Solution & Answer
Answer to Problem 1TF
The given statement is true.
Explanation of Solution
Sales allowance: The amount of reduction in sale price granted by the seller to the buyers for the goods returned due to defects or damages in the product, or incorrect sizes, is referred to as allowance granted by seller.
Description: Sometimes, customers either return goods due to manufacturing defects, or accept to keep the defective goods for a reduction in sale price. That amount of reduction in sale price, is referred to as sales allowances. Hence, the statement is true.
Conclusion
Thus, the given statement is true, in stating that the reduction in sale price of the defective merchandise is referred to as sales allowance.
Want to see more full solutions like this?
Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!
Students have asked these similar questions
If a customer purchases merchandise on credit and returns the defective merchandise beforepayment, what accounts would recognize this transaction?A. sales discount, cashB. sales returns and allowances, cashC. accounts receivable, sales discountD. accounts receivable, sales returns and allowances
Requirement a. What are the accounting requirements for a correct sales cutoff?
A.
A shipment should be recorded as a sale when the risks of ownership transfer to the buyer and collectability is reasonably assured.
B.
A shipment should be recorded as a sale when the merchandise is shipped.
C.
A shipment should be recorded as a sale when the payment for the merchandise has beeb received by the seller.
D.
A shipment should be recorded as a sale when the merchandise is received by the purchaser.
Which of the following is not an external failure cost?
a.
correcting invoice errors
b.
rework
c.
warranty work
d.
processing returned merchandise
Chapter 10 Solutions
College Accounting, Chapters 1-27
Ch. 10 - Prob. 1TFCh. 10 - All sales, for cash or on credit, can be recorded...Ch. 10 - Sales Tax Payable is a liability account that is...Ch. 10 - Prob. 4TFCh. 10 - Prob. 5TFCh. 10 - A credit sale of 250 plus a 6% sales tax would...Ch. 10 - When 25 of merchandise is returned for a credit on...Ch. 10 - Prob. 3MCCh. 10 - Prob. 4MCCh. 10 - Prob. 5MC
Ch. 10 - Prob. 1CECh. 10 - Prepare journal entries for the following sales...Ch. 10 - Prob. 3CECh. 10 - On March 24, MS Companys Accounts Receivable...Ch. 10 - Prob. 1RQCh. 10 - What is the purpose of a credit memo?Ch. 10 - Prob. 3RQCh. 10 - Prob. 4RQCh. 10 - Prob. 5RQCh. 10 - Prob. 6RQCh. 10 - What steps are followed in posting cash receipts...Ch. 10 - What steps are followed in posting cash receipts...Ch. 10 - Prob. 9RQCh. 10 - Prob. 1SEACh. 10 - SALES TRANSACTIONS AND T ACCOUNTS Using T accounts...Ch. 10 - Prob. 3SEACh. 10 - SALES RETURNS AND ALLOWANCES ADJUSTMENT At the end...Ch. 10 - Prob. 5SEACh. 10 - JOURNALIZING SALES TRANSACTIONS Enter the...Ch. 10 - Prob. 7SEACh. 10 - JOURNALIZING CASH RECEIPTS Enter the following...Ch. 10 - SCHEDULE OF ACCOUNTS RECEIVABLE From the accounts...Ch. 10 - SALES TRANSACTIONS J. K. Bijan owns a retail...Ch. 10 - Prob. 11SPACh. 10 - SALES AND CASH RECEIPTS TRANSACTIONS Sourk...Ch. 10 - SCHEDULE OF ACCOUNTS RECEIVABLE Based on the...Ch. 10 - Prob. 1SEBCh. 10 - SALES TRANSACTIONS AND T ACCOUNTS Using T accounts...Ch. 10 - Prob. 3SEBCh. 10 - SALES RETURNS AND ALLOWANCES ADJUSTMENT At the end...Ch. 10 - Prob. 5SEBCh. 10 - JOURNALIZING SALES TRANSACTIONS Enter the...Ch. 10 - JOURNALIZING SALES RETURNS AND ALLOWANCES Enter...Ch. 10 - JOURNALIZING CASH RECEIPTS Enter the following...Ch. 10 - SCHEDULE OF ACCOUNTS RECEIVABLE From the accounts...Ch. 10 - SALES TRANSACTIONS T. M. Maxwell owns a retail...Ch. 10 - CASH RECEIPTS TRANSACTIONS Color Florists, a...Ch. 10 - SALES AND CASH RECEIPTS TRANSACTIONS Paul Jackson...Ch. 10 - SCHEDULE OF ACCOUNTS RECEIVABLE Based on the...Ch. 10 - You and your spouse have separate charge accounts...Ch. 10 - Prob. 1ECCh. 10 - Geoff and Sandy Harland own and operate Wayward...Ch. 10 - Enter the following transactions in a general...
Knowledge Booster
Similar questions
- Which of the following is true about the Sales Returns and Allowances account? a. It is used to record the sale of merchandise. b. It is used to record the reduction of inventory. c. It is a contra account, deducted from sales. d. It is used to record discounts for prompt payment. e. None of the above.arrow_forwardIf 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 allowancesarrow_forwardIf a customer purchases merchandise on credit and return the defective merchandise before payment, what accounts would recognize this transaction? Assume the perpetual inventory system is used. A.Sales Discount, Cash B.Accounts Receivable, Sales Discount C.Sales Returns and Allowances, Cash D.Accounts Receivable, Sales Returns and Allowancesarrow_forward
- In which of the following scenario will the supplier be issuing a credit memo? Granting of allowance to buyer for defective merchandise All of the above Granting of volume discount Granting Trade discount to buyerarrow_forwardWhen goods are shipped FOB destination and the seller pays the freight charges, the buyer a.does not take a discount b.journalizes a reimbursement to the seller c.makes no journal entry for the freight d.journalizes a reduction for the cost of the merchandisearrow_forwardThe Sales Discounts Forfeited account ________. A. is a balance sheet account B. represents additional sales revenue C. represents additional revenue due to the customer not paying within the discount period D. is a contra Sales Revenue accountarrow_forward
- Which of the following statements concerning internal control procedures for merchandise sales is not correct? a.Accounting for a sale begins with the receipt of a purchase order or some similar document from a customer. b.Shipping and billing documents are prepared based on the order document. c.A sale and its associated receivable are recorded only when the order, shipping, and billing documents are all present. d.The order document is not necessary for the buyer to be obligated to accept and pay for the ordered goods.arrow_forwardWhat should I put for the red marked box if the answer is not "Allowance for sales returns and allowances"?arrow_forwardWhich account balance is NOT used to compute the cost of goods sold? a.Merchandise Inventory b.Purchases c.Sales d.Purchases Discountsarrow_forward
- Which one of the following statements is true regarding the cost of sales, if the perpetual inventory control system is in use? Select one: a. If goods are sold for cash or on credit, the cost of sales will decrease on the debit side. b. Under the perpetual inventory control system, there is no cost of sales. Therefore, the cost of sales is not affected. c. If goods are sold for cash or on credit, the cost of sales will increase on the debit side. d. If goods are sold for cash or on credit, the cost of sales will increase on the credit side.arrow_forwardA deduction allowed to wholesalers and retailers from the price of merchandise listed in catalogs is called a cash discount. Please explain with full explanation a. True b. Falsearrow_forwardIn the case of sales where the customer is billed before delivery of the goods, the seller should always recognize revenue before the products are delivered to the customer. the goods belong to the customer and revenue recognition is deferred until delivery. the seller may recognize revenue if control of the goods has been transferred to the customer even though physical delivery has not taken place. revenue will not be recognized until the goods are shipped to the customer.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
College Accounting, Chapters 1-27AccountingISBN:9781337794756Author:HEINTZ, James A.Publisher:Cengage Learning,
College Accounting (Book Only): A Career ApproachAccountingISBN:9781337280570Author:Scott, Cathy J.Publisher:South-Western College Pub
Century 21 Accounting Multicolumn JournalAccountingISBN:9781337679503Author:GilbertsonPublisher:Cengage- Principles of Accounting Volume 1AccountingISBN:9781947172685Author:OpenStaxPublisher:OpenStax College
Cornerstones of Financial AccountingAccountingISBN:9781337690881Author:Jay Rich, Jeff JonesPublisher:Cengage Learning
College Accounting, Chapters 1-27
Accounting
ISBN:9781337794756
Author:HEINTZ, James A.
Publisher:Cengage Learning,
College Accounting (Book Only): A Career Approach
Accounting
ISBN:9781337280570
Author:Scott, Cathy J.
Publisher:South-Western College Pub
Century 21 Accounting Multicolumn Journal
Accounting
ISBN:9781337679503
Author:Gilbertson
Publisher:Cengage
Principles of Accounting Volume 1
Accounting
ISBN:9781947172685
Author:OpenStax
Publisher:OpenStax College
Cornerstones of Financial Accounting
Accounting
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Cengage Learning