this is about merchandising actvities, customer return goods to buyer using net cost method. (perpectual syste
The Effect Of Prepaid Taxes On Assets And Liabilities
Many businesses estimate tax liability and make payments throughout the year (often quarterly). When a company overestimates its tax liability, this results in the business paying a prepaid tax. Prepaid taxes will be reversed within one year but can result in prepaid assets and liabilities.
Final Accounts
Financial accounting is one of the branches of accounting in which the transactions arising in the business over a particular period are recorded.
Ledger Posting
A ledger is an account that provides information on all the transactions that have taken place during a particular period. It is also known as General Ledger. For example, your bank account statement is a general ledger that gives information about the amount paid/debited or received/ credited from your bank account over some time.
Trial Balance and Final Accounts
In accounting we start with recording transaction with journal entries then we make separate ledger account for each type of transaction. It is very necessary to check and verify that the transaction transferred to ledgers from the journal are accurately recorded or not. Trial balance helps in this. Trial balance helps to check the accuracy of posting the ledger accounts. It helps the accountant to assist in preparing final accounts. It also helps the accountant to check whether all the debits and credits of items are recorded and posted accurately. Like in a balance sheet debit and credit side should be equal, similarly in trial balance debit balance and credit balance should tally.
Adjustment Entries
At the end of every accounting period Adjustment Entries are made in order to adjust the accounts precisely replicate the expenses and revenue of the current period. It is also known as end of period adjustment. It can also be referred as financial reporting that corrects the errors made previously in the accounting period. The basic characteristics of every adjustment entry is that it affects at least one real account and one nominal account.
this is about merchandising actvities, customer return goods to buyer using net cost method. (perpectual system)
I buy 10 cakes from Charles on account and each cost $5 dollars, 2/10, n/30
Buyer view:
Inventory 490
A/P 490
(as it is a net cost method, so i reocrd the transaction 490 rather than 500)
I return all the cake to charles
Buyer views:
A/P 490
Inventory 490
Seller veiws:
Sales and discount allowances (in this case it is return) 490
A/R 490
Inventory 300
COGS 300
So this example above is return the goods within the discount date using net cost method.
My Questions:
1, How about the customers return the goods after the discount date in net cost method (above method)? How should I record the transactions un customers and seller view?
2, How about the the allowance? As above example is customers return goods to seller, but allowance is the customers keep the product and the seller give some amount of money to the buyer, how should i record in seller view?
In net cost mehtod the purchase of goods entry [ by the buyer] and sale of goods entry[ by the seller] is doen by bothe buyer and seller at net cost i.e sale price of goods minus discount.
In this example the cash discount of 2% [i.e $ 10] is available to the buyer if amount is paid within 10 days of purchase. After 10 days cash discount will not be available to the buyer and the buyer needs to pay full amount of sales price of goods i.e 500 instead 490.
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