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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

With regard to goods sold and purchased, explain how sales returns and allowances and purchases returns and allowances are different from each other.

To determine

Explain the manner in which sales and return allowances and purchases returns and allowances are different from each other in relation with the goods sold and purchased.  

Explanation

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.

Purchase returns: Purchase returns are the goods returned by the buyer out of the goods purchased...

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