These two Sales Revenue accounts (the sales returns and sales allowances) are classified as <em>Contra accounts.</em> They have debit balances unlike the Sales Revenue account.
- The purpose of their creation is to maintain the Sales Revenue account at its gross amount for measure purposes.
- The Sales Returns account is the General Ledger account for recording goods returned by customers. It reduces the Accounts Receivable account, which is credited with Sales Returns.
- The Sales Allowances account records allowances granted to customers for defective goods, which reduce their balances.
Thus, the two sales accounts are contra accounts and they have debit balances.
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I think it’s d. but im so sorry if im wrong!
Answer:
1. Apple Stocks Dr. $75,000
Deferred Donation Income Cr. $75,000
2. Apple Stocks Dr. $1,500
Gain on Apple Stocks Cr. $1,500
3. Cash Dr. $ 76,000
Gain/Loss on Apple stocks Dr.$1,500
Apple Stocks Cr.$76,500
Explanation:
1. when stocks are received subject to a condition that we can't recognize donation income. therefore it is recorded as liability. please note that deferred income is called as liability.
2. When value of stocks increase, asset stock of apple also increase by differential amount.
3. when asset is sold, the loss is recognized and assets are knocked off from books and cash asset is recorded.
$4 million.
An item is worth what the market is willing to pay for it, which is sometimes different than the estimated value.
1) Change the nature of the product
2) Give away discounts
3) Reduce the price of the product compared to the competitiveness of the market
