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Why is a sales return or allowance usually recorded in a special Sales Returns and Allowances account rather than being debited to the Sales account?
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How should a return of merchandise purchased on account be recorded?
As a debit to the accounts payable account and a credit to the purchases returns and allowances account
What type of account is Purchases returns and allowances?
A contra purchase account
Account type of purchase returns and allowances?
debit
Does sales returns and allowances have a normal debit balance?
That is correct. Sales and returns allowances is what is called a "Contra" account because it exists to reduce the net balance of an account. Sales is a credit account, so you debit sales returns and allowances in order to reduce your net sales.
What is journal entry for allowances to debtors?
[Debit] Allowance for debtors account [Credit] Accounts receivable account
A sales return for credit on account would be recorded in what type of journal?
General Journal Sales Returns and Allowances - A company with sales returns and allowances can record them in the General Journal.
How should a return of merchandise purchased on account be recorded?
As a debit to the accounts payable account and a credit to the purchases returns and allowances account
What is sales returns and allowances classified as?
An income account. Debit Returns & Allowances, Credit Cash.
What kind of an account are sales return and allowances?
Sales Returns and Allowances is a contra income account.
What type of account is Purchases returns and allowances?
A contra purchase account
Account type of purchase returns and allowances?
debit
Does sales returns and allowances have a normal debit balance?
That is correct. Sales and returns allowances is what is called a "Contra" account because it exists to reduce the net balance of an account. Sales is a credit account, so you debit sales returns and allowances in order to reduce your net sales.
What is journal entry for allowances to debtors?
[Debit] Allowance for debtors account [Credit] Accounts receivable account
The Sales Returns and Allowances account is classified as a?
Sales Returns and Allowances are contra revenue accounts because they reduce that total amount of sales. [Sales-Sales returns and allowances=Net sales]. They are reported on the income statement.
Does sales returns and allowances have normal credit balance?
No sales returns and allowances has debit balance as a normal balance because these accounts are contra to actual sales account and that's why account balance is reverse of actual sales account.
Journal entry in financial accounting for purchase return?
Like sales discounts, sales returns and allowances reduce sales revenue. They also result in additional shipping and other expenses. Since managers often want to know the amount of returns and allowances for a period, the seller records sales returns and allowances in a separate account. Sales Returns and allowances is a "Contra (or offsetting) asset account to Sales. The seller debits Sales Returns and Allowances for the amount of the return or allowance. If the original sale was on account, the seller credits Accounts Receivable. Since merchandise inventory is kept up to date in a perpetual system, the seller adds the cost of the returned merchandise to the merchandise inventory account. The seller must also credit the cost of returned merchandise to the cost of merchandise sold account, since this account was debited when the original sale was made. What if the buyer pays cash and then later returns the merchandise. In this case the seller may issue a credit and apply it against other accounts receivables owed by the buyer, or the cash may be refunded. If the credit is applied against the buyer's other receivables, the seller records entries similar to those preceding. If cash is refunded for merchandise or for allowances, the seller debits sales returns and allowances and credits cash.
The Sales Returns and Allowances account is debited when?
Payment is made to a supplier within the discount period.
