Quiz #3 Sales and Sales Related Transactions
ANALYZE.COMPUTE.WRITE
09.29.16
According to Win Ballada, a CPA and MBA, sales returns and allowances is about the buyers which maybe dissatisfied with the merchandise because the goods are damaged or defective, of inferior quality or not in accordance with their specifications which are permitted to return the goods and the seller may just grant an allowance or deduction from the selling price. It is recorded as a debit to an account. It is recorded as purchase returns and allowances in the seller's book. She also said that cash discounts are discounts for prompt payment and it is composed of purchase discount and sales discount. Sales discount is a cash discount from the seller's point of view, a contra-income account and deducted from gross sales in the income statement. It has a discount period which means it is the period covered by the discount.
11/15 I've got that score because I have a wrong answer in items 1, 7, and 8. In item #1, I answered on received of a promissory note as the terms of selling that is considered not acceptable in merchandising business which is wrong because the answer should be on issuance of promissory note to the question. Next, in item #7, I answered The business sold merchandise to a customer, P20,000. Terms: 10,000 downpayment, 5,000 promissory note, 5,000 at 2/10, n/20 as the transaction which is not acceptable which is wrong because the answer should be The business sold merchandise to a customer, P20,000. Terms: 10% trade discount and the balance at 2/10, 1/20, n/30. I thought my answer is correct because I forgot that promissory note also has a value and I've got confused. I don't find the correct answer as not acceptable because i know that there is a transaction with trade discount. Lastly, in item #8, I answered The business has the right to immediately charge the buyer with a reasonable interest upon non-compliance on collectibles as a TRUE statement about selling activity of a merchandising business but the correct answer should be The business has an obligation to accept returned merchandise that are defective if found that the buyer is not responsible for the defect.
I really need to study and analyze sales and sales related transactions because I had a hard time answering all of those items and also the job sheet.
