BuyFind

College Accounting (Book Only): A ...

12th Edition
Cathy J. Scott
Publisher: Cengage Learning
ISBN: 9781305084087
BuyFind

College Accounting (Book Only): A ...

12th Edition
Cathy J. Scott
Publisher: Cengage Learning
ISBN: 9781305084087

Solutions

Chapter
Section
Chapter 9, Problem 1QY
Textbook Problem

Which of the following is true about the Sales Returns and Allowances account?

  1. a. It is used to record the sale of merchandise.
  2. b. It is used to record the reduction of inventory.
  3. c. It is a contra account, deducted from sales.
  4. d. It is used to record discounts for prompt payment.
  5. e. None of the above.

Expert Solution
To determine

State the option that provides true statement on the sales returns and allowance account.

Answer to Problem 1QY

c. It is a contra account, deducted from sales.

Explanation of Solution

Sales returns and allowances:

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 goods returned, or reduced amount in sale price, is referred to as sales returns and allowances. These are recorded as contra-revenue accounts.

Justification for the incorrect answer:

Option a, b, d and e:

Sales returns and allowance account records the return of goods due to the manufacturing defects, or accept to or accept to keep the defective goods for a reduction in sale price. That amount of goods returned, or reduced amount in sale price. Hence, Option a, b, d and e are incorrect answer.

Justification for the correct answer:

Option c:

Sales returns and allowance account records the amount of goods returned, or reduced amount in sale price. It is treated as contra revenue account and they are deducted from the sales account (revenue).

Therefore, from the above explanation it is observed that Option c (It is a contra account, deducted form sales)  is the correct answer and other options a, b and d are incorrect answer.

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!

Get Solutions

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!

Get Solutions

Chapter 9 Solutions

College Accounting (Book Only): A Career Approach
Show all chapter solutions
Ch. 9 - What is the difference between a wholesale...Ch. 9 - For each of the following accounts, identify...Ch. 9 - What is the purpose of each of the following? a....Ch. 9 - Why is an accounts receivable ledger or an...Ch. 9 - Why is it a good practice to post daily to the...Ch. 9 - With regard to goods sold and purchased, explain...Ch. 9 - Explain the meaning and importance of the shipping...Ch. 9 - Describe the four procedures that most companies...Ch. 9 - Describe the posting procedures to the general...Ch. 9 - Describe the procedure for posting each of the...Ch. 9 - Who issues a credit memorandum and why?Ch. 9 - What is the difference between a periodic...Ch. 9 - Record the following transactions in general...Ch. 9 - Post the following entry to the general ledger and...Ch. 9 - Record the following transactions in general...Ch. 9 - Journalize the following transactions in general...Ch. 9 - Post the following entry to the general ledger and...Ch. 9 - Record the following transactions in general...Ch. 9 - Record the following transactions for a perpetual...Ch. 9 - Toby Company had the following sales transactions...Ch. 9 - Williams Corporation had the following purchases...Ch. 9 - Kelley Company has completed the following October...Ch. 9 - Bell Florists sells flowers on a retail basis....Ch. 9 - Berrys Pet Store records purchase transactions in...Ch. 9 - Shirleys Beauty Store records sales and purchase...Ch. 9 - The following transactions relate to Hawkins,...Ch. 9 - Gomez Company sells electrical supplies on a...Ch. 9 - Patterson Appliance uses a three-column purchases...Ch. 9 - Abbott Florists sells flowers on a retail basis....Ch. 9 - Lowerys Pet Depot records purchase transactions in...Ch. 9 - Mays Beauty Store records sales and purchase...Ch. 9 - The following transactions relate to Khan, Inc., a...Ch. 9 - R. J. Hinton Company sells electrical supplies on...Ch. 9 - West Bicycle Shop uses a three-column purchases...Ch. 9 - Jax Mercantile Co. has been northern Colorados...Ch. 9 - You are the bookkeeper at a small merchandising...Ch. 9 - Following is a trial balance prepared just before...Ch. 9 - Ms. Valli of All About You Spa has decided to...

Additional Business Textbook Solutions

Find more solutions based on key concepts
Show solutions
Fill in the blanks:

Brief Principles of Macroeconomics (MindTap Course List)

Define net exports and net capital outflow. Explain how they are related.

Principles of Macroeconomics (MindTap Course List)

Describe marketing uses of branding

MKTG 12:STUDENT ED.-TEXT

YIELD TO MATURITY AND FUTURE PRICE A bond has a 1,000 par value, 10 years to maturity, and a 7% annual coupon a...

Fundamentals of Financial Management, Concise Edition (with Thomson ONE - Business School Edition, 1 term (6 months) Printed Access Card) (MindTap Course List)