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Q. Explain about cash discount?
In a few industries credit terms include a cash discount of 1 percent to 3 percent to induce untimely payment of an amount due. A cash discount is a deduction from the invoice price that is able to be taken only if the invoice is paid within a specified time. A cash discount varies from a trade discount in that a cash discount is a deduction from the gross selling price for the prompt payment of an invoice. In contrast a trade discount is a inference from the list price to determine the gross selling price or invoice price. Sellers call a cash discount a sales discount as well as buyers calls it a purchase discount. Companies habitually state cash discount terms as follows
- 2/10, n/30-denotes a buyer who pays within 10 days following the invoice date may deduct a discount of 2 percent of the invoice price. If payment isn't made within the discount period, the entire invoice price is due 30 days from the invoice date.
- 2/EOM, n/60-denotes a buyer who pays by the end of the month of purchase may deduct a 2 percent discount from the invoice price. If payment isn't made within the discount period the entire invoice price is due 60 days from the invoice date.
- 2/10/EOM, n/60-denotes a buyer who pays by the 10th of the month following the month of purchase may deduct a 2 percent discount from the invoice price. If payment isn't made within the discount period the entire invoice price is due 60 days from the invoice date.
Sellers can't record the sales discount prior to they receive the payment since they don't know when the buyer will pay the invoice. A cash discount occupied by the buyer reduces the cash that the seller actually collects from the sale of the goods thus the seller must indicate this fact in its accounting records. The following entries illustrate how to record a sale and a subsequent sales discount.
The list of accounts below and the unadjusted balances of these accounts were taken from the ledger of the Manville Corporation at the end of their accounting period, March 31,
implication of applying aacounting concept wronly
What time is it?
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I need help with the journal entries for chapters 8 & 9 of this project.
Determine in brief about the SALES ACTIVITY Just as merchandizing businesses follow specific procedures to process and record purchases, they follow numerous procedures to proc
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how we prepare ledger account and trial balance?
the books of deven verma could not be tallied.the accountant transferred the difference of Rs.1270 in the suspense account on the debit side the following mistakes were found later
Fund flow deals with transaction within financial year (One year) while Cash flow Statement record only the cash transaction.
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