College Accounting, Chapters 1-27 (New in Accounting from Heintz and Parry)
22nd Edition
ISBN: 9781305666160
Author: James A. Heintz, Robert W. Parry
Publisher: Cengage Learning
expand_more
expand_more
format_list_bulleted
Question
Chapter 10, Problem 1TF
To determine
Indicate whether the given statement is true or false.
Expert Solution & Answer
Answer to Problem 1TF
The given statement is true.
Explanation of Solution
Sales allowance: The amount of reduction in sale price granted by the seller to the buyers for the goods returned due to defects or damages in the product, or incorrect sizes, is referred to as allowance granted by seller.
Description: 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 reduction in sale price, is referred to as sales allowances. Hence, the statement is true.
Conclusion
Thus, the given statement is true, in stating that the reduction in sale price of the defective merchandise is referred to as sales allowance.
Want to see more full solutions like this?
Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!
Students have asked these similar questions
The return of defective merchandise increases the amount to be received from
the customer.
True
False
The Sales Discounts Forfeited account ________.
A.
is a balance sheet account
B.
represents additional sales revenue
C.
represents additional revenue due to the customer not paying within the discount period
D.
is a contra Sales Revenue account
If a customer purchases merchandise on credit and returns the defective merchandise beforepayment, what accounts would recognize this transaction?A. sales discount, cashB. sales returns and allowances, cashC. accounts receivable, sales discountD. accounts receivable, sales returns and allowances
Chapter 10 Solutions
College Accounting, Chapters 1-27 (New in Accounting from Heintz and Parry)
Ch. 10 - Prob. 1TFCh. 10 - All sales, for cash or on credit, can be recorded...Ch. 10 - Sales Tax Payable is a liability account that is...Ch. 10 - Prob. 4TFCh. 10 - Prob. 5TFCh. 10 - A credit sale of 250 plus a 6% sales tax would...Ch. 10 - When 25 of merchandise is returned for a credit on...Ch. 10 - Prob. 3MCCh. 10 - Prob. 4MCCh. 10 - Prob. 5MC
Ch. 10 - Prob. 1CECh. 10 - Prepare journal entries for the following sales...Ch. 10 - Prob. 3CECh. 10 - On March 24, MS Companys Accounts Receivable...Ch. 10 - Prob. 1RQCh. 10 - What is the purpose of a credit memo?Ch. 10 - Prob. 3RQCh. 10 - Prob. 4RQCh. 10 - Prob. 5RQCh. 10 - Prob. 6RQCh. 10 - What steps are followed in posting cash receipts...Ch. 10 - What steps are followed in posting cash receipts...Ch. 10 - Prob. 9RQCh. 10 - Prob. 1SEACh. 10 - SALES TRANSACTIONS AND T ACCOUNTS Using T accounts...Ch. 10 - Prob. 3SEACh. 10 - Prob. 4SEACh. 10 - JOURNALIZING SALES TRANSACTIONS Enter the...Ch. 10 - Prob. 6SEACh. 10 - JOURNALIZING CASH RECEIPTS Enter the following...Ch. 10 - SCHEDULE OF ACCOUNTS RECEIVABLE From the accounts...Ch. 10 - SALES TRANSACTIONS J. K. Bijan owns a retail...Ch. 10 - Prob. 10SPACh. 10 - SALES AND CASH RECEIPTS TRANSACTIONS Sourk...Ch. 10 - SCHEDULE OF ACCOUNTS RECEIVABLE Based on the...Ch. 10 - Prob. 1SEBCh. 10 - SALES TRANSACTIONS AND T ACCOUNTS Using T accounts...Ch. 10 - Prob. 3SEBCh. 10 - Prob. 4SEBCh. 10 - JOURNALIZING SALES TRANSACTIONS Enter the...Ch. 10 - JOURNALIZING SALES RETURNS AND ALLOWANCES Enter...Ch. 10 - JOURNALIZING CASH RECEIPTS Enter the following...Ch. 10 - SCHEDULE OF ACCOUNTS RECEIVABLE From the accounts...Ch. 10 - SALES TRANSACTIONS T. M. Maxwell owns a retail...Ch. 10 - CASH RECEIPTS TRANSACTIONS Color Florists, a...Ch. 10 - SALES AND CASH RECEIPTS TRANSACTIONS Paul Jackson...Ch. 10 - Prob. 12SPBCh. 10 - You and your spouse have separate charge accounts...Ch. 10 - Prob. 1ECCh. 10 - Geoff and Sandy Harland own and operate Wayward...Ch. 10 - Enter the following transactions in a general...
Knowledge Booster
Similar questions
- The return of the defective merchandise from a sale of merchandise on account decreases the amount of the receivables. * True Falsearrow_forwardA credit memo states the amount of a sales allowance or return True Falsearrow_forwardDefine and describe the differences between a sales return and a sales allowancearrow_forward
- Which of the following statements is not true regarding revenue recognition regarding gift cards? A. "Breakage" refers to the unused portion of gift card balances B. "Breakage" can only be recognized as revenue to the extent that it is probable a reversal will not be necessary. C. It is typical that a portion of gift card sales will go unused by customers.arrow_forwardWhen goods are shipped FOB destination and the seller pays the freight charges, the buyer a.does not take a discount b.journalizes a reimbursement to the seller c.makes no journal entry for the freight d.journalizes a reduction for the cost of the merchandisearrow_forwardRequirement a. What are the accounting requirements for a correct sales cutoff? A. A shipment should be recorded as a sale when the risks of ownership transfer to the buyer and collectability is reasonably assured. B. A shipment should be recorded as a sale when the merchandise is shipped. C. A shipment should be recorded as a sale when the payment for the merchandise has beeb received by the seller. D. A shipment should be recorded as a sale when the merchandise is received by the purchaser.arrow_forward
- If a customer purchases merchandise on credit and return the defective merchandise before payment, what accounts would recognize this transaction? Assume the perpetual inventory system is used. A.Sales Discount, Cash B.Accounts Receivable, Sales Discount C.Sales Returns and Allowances, Cash D.Accounts Receivable, Sales Returns and Allowancesarrow_forwardWhich of the following would not result in a reduction of the amount invoiced to a customer when a credit sale is made? A. Quantity discount B. Cash-free discount C. Sales discountD. Two-for-one specialarrow_forwardA deduction allowed to wholesalers and retailers from the price of merchandise listed in catalogs is called a cash discount. Please explain with full explanation a. True b. Falsearrow_forward
- Why do you add transportation in and do not deduct delivery expense when determining the cost of merchandise purchased?arrow_forwardDecreases in the seller's receivable from a customer's return of merchandise or from granting the customer an allowance from the amount owed to the seller. Select one: O a. Freight Out b. Purchases Discount and Allowances c. Freight In d. Sales Discount and Allowancesarrow_forwardWhen the buyer pays an invoice within the discount period, the amount of the discount increases the inventory account. True Falsearrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
College Accounting (Book Only): A Career ApproachAccountingISBN:9781337280570Author:Scott, Cathy J.Publisher:South-Western College Pub
Auditing: A Risk Based-Approach (MindTap Course L...AccountingISBN:9781337619455Author:Karla M Johnstone, Audrey A. Gramling, Larry E. RittenbergPublisher:Cengage Learning
College Accounting (Book Only): A Career Approach
Accounting
ISBN:9781337280570
Author:Scott, Cathy J.
Publisher:South-Western College Pub
Auditing: A Risk Based-Approach (MindTap Course L...
Accounting
ISBN:9781337619455
Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg
Publisher:Cengage Learning