Briefly explain the following: 1). Discount allowed 2). Discount received 3). Contra entries.
Answers
Answered by
1
Answer:
When the seller allows a discount, this is recorded as a reduction of revenues, and is typically a debit to a contra revenue account. For example, the seller allows a $50 discount from the billed price of $1,000 in services that it has provided to a customer. The entry to record the receipt of cash from the customer is a debit of $950 to the cash account, a debit of $50 to the sales discount contra revenue account, and a $1,000 credit to the accounts receivable account. Thus, the net effect of the transaction is to reduce the amount of gross sales.
Similar questions
Science,
2 months ago
English,
2 months ago
English,
5 months ago
Computer Science,
5 months ago
Math,
10 months ago
Social Sciences,
10 months ago
Physics,
10 months ago