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College Accounting (Book Only): A ...

13th Edition
Scott + 1 other
ISBN: 9781337280570

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BuyFindarrow_forward

College Accounting (Book Only): A ...

13th Edition
Scott + 1 other
ISBN: 9781337280570
Textbook Problem

You are the bookkeeper at a small merchandising firm. You are comparing the income statements from the last three years. You notice that the Purchases Returns and Allowances account (as a percentage of net sales) has been increasing at an alarming rate. If you were a manager, to whom would you speak in the organization to help you understand why so much merchandise is being returned? What types of questions would you ask?

To determine

Discuss the concerns behind the increase of purchase returns and allowances.

Explanation

While evaluating the financial statements during the year, the income statement had revealed that the purchase returns and allowances had increased at an alarming rate. The issues that have been raised should be enquired with the supplier manager, manager of receiving department, and customers...

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